MEDICAL TOURISM IN INDIA, Special Emphasis on Ayurvedic Medicine

TOWARDS THE FUFILLMENT OF THE DEGREE IN MBA-IB



DISSERTATION ON
MEDICAL TOURISM IN INDIA, Special Emphasis on Ayurvedic Medicine..






Submitted By:















TABLE OF CONTENTS


EXECUTIVE SUMMARY
1 INTRODUCTION
2 OVERVIEW OF MEDICAL TOIRISM IN GLOBAL SCENARIO
2.1 BENEFITS OF MEDICAL TOURISM
2.2 IS INDIA READY FOR GLOBAL MEDICAL TOURISM?
3 MEDICAL TOURISM IN INDIA – THE CURRENT SCENARIO
3.1 COST COMPETITIVENESS – THE KEY DRIVER
3.2 THE SERVICE SPECTRUM
3.3 CONSUMER PROFILE
3.4 MARKET PLAYERS
3.5 INDIA IN MEDICAL TOURISM – SWOT ANALYSIS
3.6 ADVANTAGES AND CHALLENGES
3.7 COST COMPARISON BETWEEN INDIA AND USA
4 LESSONS FROM INTERNATIONAL SUCCESS STORIES
4.1 THE CASE OF CUBA
4.1.1 Promoting Privatization of HealthCare
4.1.2 Centralized Marketing through SERVIMED
4.2 THE CASE OF THAILAND
4.2.1 Inter-Sectorial Coordination
4.2.2 Effective Marketing - Tourism Authority of Thailand
4.2.3 Focus on Hospitality
4.2.4 Building Infrastructure
5 INDIA - STRATEGIC THRUSTS FOR THE FUTURE
5.1 ROLE OF GOVERNMENT
5.2 FORMATION OF NATIONAL ASSOCIATION OF HEALTH TOURISM (NHAT)
5.3 ROLE OF PRIVATE SECTOR
5.4 VALUE INNOVATION THROUGH MEDICITIES
6 MEDICAL TOURISM: OPPORTUNITIES AND CHALLENGES FOR INDIA
6.1 GROWTH OF MEDICAL TOURISM
6.2 PROMOTION OF MEDICAL TOURISM
7 CONCLUSIONS
8 REFERENCES
9 APPENDIXES
9.1 SIZE OF MEDICAL TOURISM MARKET IN INDIA – 2012
9.2 ECONOMICS OF HEALTHCARE BUSINESS










Executive Summary

The Medical Tourism Industry in India is poised to be the next big success story
after software. According to a Mckinsey-CII study the market size is estimated to
be Rs.5000-10000 Crores by 2012. The key competitive advantages of India in
medical tourism stem from the following: low cost advantage, strong reputation in
the advanced healthcare segment (cardiovascular surgery, organ transplants,
eye surgery) and the diversity of tourist destinations available in the country. The
key concerns facing the industry include: absence of government initiative, lack
of a coordinated effort to promote the industry, no accreditation mechanism for
hospitals and the lack of uniform pricing policies and standards across hospitals.
To realize the industry’s full potential, a coordinated effort from the various
players – government, private players and the associated sectors is very
essential. The government should help in instituting an accreditation mechanism
and device policies to facilitate private investment in the sector. An apex body
should be formed for the industry in the lines of NASSCOM1 and should focus on
building the Indian Brand across the world and promote inter-sectoral
cooperation. The private sector for its part, should invest more in infrastructure,
horizontally integrate into related services and build joint ventures and alliances
with overseas health institutions and insurance players. Finally establishment of
MEDICITIES akin to STPI2 as a public-private partnership model can also give a
major fillip to India’s quest for success in medical tourism.
1.1.1.1.1
1 Apex body for Software in India
2 Software Technology Parks of India





















1 Introduction

Medical Tourism refers to movement of consumers to the country providing the
service for diagnosis and treatment. During the past few years, the number of
people going out of their home country to consume health services has
significantly increased. The size of this market is estimated to be $40 billion
based on a Saudi Report in 2000. During the past four years, the market grew at
a whopping rate of 20-30% and is expected to grow further. Considering this
growth the current market size is estimated to be $100 billion.
Medical Tourism industry offers tremendous potential for the developing
countries because of their low-cost advantage. The advantages of medical
tourism include improvement in export earnings and healthcare infrastructure. No
doubt a lot of countries– India, Thailand, Malaysia, Singapore, South Africa,
Cuba, Jordan and Lithuania are fighting for a share of the market. In order to
realize the full potential of the industry, it is imperative for these countries to
develop a strategic plan for coordinating various industry players –the medical
practitioners, private hospitals, policy makers, hotels, transportation services and
tour operators. This report presents the strategy that needs to be implemented by
India, one of the key destinations for Medical tourism, in order to achieve
industry-leadership.

MEDICAL TOURISM AS AN INDUSTRY

Medical tourism can be broadly defined as provision of ‘cost effective’ private medical care in collaboration with the tourism industry for patients needing surgical and other forms of specialized treatment. This process is being facilitated by the corporate sector involved in medical care as well as the tourism industry - both private and public.

In many developing countries it is being actively promoted by the government’s official policy. India’s National Health policy 2002, for example, says: “To capitalise on the comparative cost advantage enjoyed by domestic health facilities in the secondary and tertiary sector, the policy will encourage the supply of services to patients of foreign origin on payment. The rendering of such services on payment in foreign exchange will be treated as ‘deemed exports’ and will be made eligible for all fiscal incentives extended to export earnings”. The formulation draws from recommendations that the corporate sector has been making in India and specifically from the “Policy Framework for Reforms in Health Care”, drafted by the prime minister’s Advisory Council on Trade and Industry, headed by Mukesh Ambani and Kumaramangalam Birla.








2.Overview Of Medical Tourism In Global Scenario

Countries from where people head for India are UK, Bangaladesh, Oman, SriLanka, Indonesia, Mauritius, Nigeria, Kenya, and Pakistan etc. The international patients can make decision by looking at the following table, which shows charges against the type of surgery.


Cost Table

Procedure Charges (US $)
Category US INDIA
Heart Surgery
Bone marrow transplant
Liver transplant
Orthopedic Surgery
Cataract Surgery 30,000
250,000
300,000
20,000
2,000 8000
69,000
69,000
6,000
1,250


India offers a real good cost advantage over the western countries. This cost factor becomes very important while formulating schemes to attract the Indian diaspora as they generally compare the relative costs before going for treatment.
Healthy Budget table
Heart Surgery Costs $ 30,000 ( Rs 14.4 lakhs) in the US, But Indian Hospitals charge Rs 4 Lakh.
Orthopedic Surgery
In the west, the expense comes to $20,000(Rs 9.6 lakh). The package in India costs one third of that amount.
Cataract Surgery $20,000 is the price for surgery in the US. In India, it comes to just $500
Liver Transplant The cost comes to a whopping $300,000 abroad while Indian super specialty hospitals perform the operation for






Global Medical Tourism

Country
No of Foreigners treated last year


From


Money Earned

Strengths



THAILAND

600,000
US, UK

$470 m
Cosmetic surgery,
Organ transplants,
Dental treatment,
Joint replacements

JORDAN
126,000

Middle East
$600 m

Organ transplants,
Fertility treatment,
Cardiac care


INDIA

100,000
Middle East, Bangaladesh, UK, Developing countries

N.A

Cardiac care, Joint Replacements, Lasik



MALAYSIA

85,000
US, Japan, Developing countries

$40 m
Cosmetic surgery


SOUTH AFRICA

50,000

US, UK

N.A

Cosmetic surgery, Lasik. Dental treatment






Treatment Costs ($)*

Procedure

US

INDIA

SOUTH AFRICA
THAILAND

Facelift

8000-20,000
10,000- 20,000
1,252
2,682

Hip replacement
17,000
2,500
6,671
N.A


Open heart surgery
150,000
5,000- 10,000
13,333

7,500

Eye (Lasik)

3,100

7,000
2,166

730











Medical Travelers Clusters

Ø The first is made up of the Americans
Ø The second major group- the British
Ø The third big group of medical travelers comes from the Middle East
Ø The last group of medical travelers from a motley lot

OUTSOURCING

Outsourcing of logistics has changed over the years we have seen business models adapted to meet the needs of the buyer. Hospital major areas like house keeping, Food and Beverage, Lenin, diagnostics labs, medical equipment, ambulatory services etc are outsourced. Hospital focuses on core activity of patient care.
Medical Business Process Outsourcing includes Medical coding, Billing, Claims Processing, Transcription etc.



Global Economic and Logistic Trends.


Global Economic Change
Changing Business Logistics practices

New Pressures

*Rapid growth in business services and high-tech manufacturing

*Rapid growth in international Trade

*Competition on the basis of cost, quality and time.

*Outsourcing for the coordination of three flows: Goods, Information and Funds
*Geographic spread of production.
*Just in time Inventory Management.
*Greater sensitivity to transit/delivery times.
*Cost competition
*Customers are often part of large supply chains.









2.1Benefits of Medical Tourism

Tangible

Foreign exchange earrings which enable economic wealth of nation
• Cost Advantage in Tariff over the Developed countries
• Improve information sharing
• Increase in efficiency of patient care process, cutting edge treatment.
• Improvement in hospital supply chain efficiency
• Strategic alliances with business partners within and outside the country
• Technology and Knowledge Transfer
• Better logistics performance both in internal and external
• Creation of employment opportunities in the industry
• Better utilization of Infrastructure and skilled manpower
• Opportunity for development in Infrastructure in Health, Tourism and Travel.
• Economies of scale.
• Connectivity with air, road, rail and information and communication industries
• Clustering of medical Travelers
• Health opportunities for foreign patients may lead to better standards at home.
• Scope for Research and Development to offer comprehensive medical solutions.

Intangible

• International acceptance of country as a global healthcare provider
• Social and cross cultural experience
• International customer relations
• Global Marketing and Medical Trade relations
• Brand image of nation as world-class healthcare destination.
• Competitive advantage
• Better coordination among the partners i.e. hospital and hospitality industry.
• Public and Private Partnerships
• Patient satisfaction








2.3 Is India prepared for global medical tourism boom?
In recent years, India is being seen as an important player in the globally growing "Medical Tourism", which is projected as a new segment in travel and healthcare business. The former Indian finance minister Jaswant Singh envisaged to make India a "Global health destination" and the budget tabled by him included government policy for collaboration between the available medical expertise in the country and tourism industry.
In simple words, medical tourism provides state-of-the-art private medical care in collaboration with tourism industry to patients from other countries at highly competitive price when compared to those prevalent in the western countries. The CII- McKinsey report mentions that the medical tourism market has been growing at the rate of 15 per cent for past five years and by 2012, Rs 10,000 crore will be added to revenues of the private players. Globally, medical tourism is said to be USD 40 billion industry and analysis available project that people from Afro-Asian countries spend as much as USD 20 billion every year on healthcare services from outside their countries.
Foremost, amongst the current private players, in medical tourism are hospitals in the Apollo chain. Main destinations are Delhi, Mumbai, Chennai, Bangalore and Hyderabad. These cities have private hospitals with medical expertise that can offer world class healthcare that costs one fifth to one tenth of the cost in US or Europe depending on the intervention required.
In addition to above destinations, the country has many cities with advanced medical facilities making India, a country with tremendous potential to capitalise on to increase its earnings to more than USD 1 billion annually and create hundreds of thousands new jobs in many sectors. This projection excludes earnings from other products included in the wellness tourism meant for rejuvenation of body and mind, eg herbal therapy, naturopathy, yoga, aromatherapy, reiki, music therapy which does not require advanced medical expertise.
India is relatively new entrant into this field and it has to prepare to face the already existing competition from other Asian countries, namely Thailand, Malaysia and Singapore. These countries together currently attract as much as ten times more medical tourists than India. Hongkong and South Africa are emerging as big medical tourism destinations. The countries that are actively promoting medical tourism include Israel, Jordan, Thailand, Malaysia, Cuba and Costa Rica. Other countries including Greece and Croatia plan to be attractive healthcare destinations.
The trends in this new-founded tourism product are encouraging. However, there is an obvious lack of any conscious and well-founded efforts to market medical tourism by our country. The crucial partners in this industry include central government ministries of finance, tourism, health and medical entrepreneurs, tourist industry and insurance companies.
In many countries, medical tourism is promoted by the government's official policy, which facilitates effective working of medical entrepreneurs and tourist industry to attract medical tourists
The apprehensions expressed by some sections that "systematic development of medical tourism will boost up earnings by catering to the wealthy foreigners and Indians working in the foreign countries but it may adversely hit the low income population" need to be addressed for gaining approval of political opinions with varied views on liberalisation. From past ten years, India has entered a phase in medical expertise that is considered on par with international standards. This is because of high quality doctors and medical entrepreneurs who developed hospitals with required infrastructure and management style. Some of these hospitals have marketing departments to increase visibility and acceptance of their products in some countries.
They have got some success in overcoming prejudices of foreign patients about healthcare in developing countries. However in the current scenario, there is urgent need to streamline array of activities involved in the making India "Global health destination". We require urgent formulation of policies and procedures by top level in the government and also co-ordination of activities of partners required to play key roles to ensure that India uses its strength in medical field to get global financial benefits.













3. Medical Tourism in India – The Current Scenario
Medical Tourism is poised to be the next Indian success story after Information
Technology. According to a Mckinsey-CII study the industry’s earning potential
estimated at Rs.5000-10000 Crores by 2012. Worldwide, healthcare is said to be a $3-trillion industry, and India is in a position to tap the top-end segment by highlighting its facilities and services, and exploiting the brand equity of leading Indian healthcare professionals across the globe.

“Medical Tourism", the term refers to the increasing tendency among people from the UK, the USA and many other third world countries, where medical services are either very expensive or not available, to leave their countries in search for more affordable health options, often packaged with tourist attractions.

Tourism is an integral part of many economies’ services industry and is an important source of foreign exchange. The labour-intensive nature of the tourism industry also makes it an excellent generator of employment. In 2002, the travel-and-tourism industry is expected to generate some US$3.3 trillion of GDP and almost 200 million jobs across the world economy. Approximately one third of this would come directly from the industry itself and the remainder from the strong linkages to other related sectors such as entertainment, retail and construction.

Medical Tourism is perceived as one of the fastest growing segments in marketing ‘Destination India’ today. The equation is ‘ World Class Healthcare ’ at 'Economical Price '. Stable economic growth will create an increase in freight flows from, towards, through, and inside the country. All this will stimulate the investments in roads and railroads. As globalization advances, both domestic and international tourism pose new and unprecedented challenges to the health sector and its various partners. The size of the Medical Tourism industry stands between Rs 1200 Crore to Rs 1500 Crore and is growing at rate of 30 percent annually.

More importantly, Medical Tourism is growing rapidly and turning out to be an immense business opportunity for nations that are positioning themselves correctly. Last year, just five countries in Asia – Thailand, Malaysia, Jordan, Singapore and India- pulled in over 1.3 million medical travelers and earned over $1billion (in treatment costs alone). In each of these nations, medical travel spends are growing at 20% plus year-on-year. Elsewhere around the world, Hong Kong, Lithuania and South Africa are emerging as big medical/healthcare destinations. And a dozen other nations including Croatia and Greece plan to make themselves attractive healthcare destinations.

Five years ago, hardly 10000 foreign patients visited India for medical treatment.
Today India is a key player in medical tourism with 100,000 foreign patients
coming in every year and revenue of Rs.1500 Crores. The current market
growth-rate is around 30% per year and the country is inching closer to major
players like Singapore and Thailand.




The following sections discuss in detail the
current state of the Medical Tourism in India:

India’s Medical Infrastructure

15000 Hospitals
875000 Hospital Beds
500000 Doctors
737000 Nurses
170 Medical Colleges
350000 Pharmacies


3.1 Cost Competitiveness – The Key driver
The main reason for India’s emergence as a preferred destination is the inherent
advantage of its healthcare industry. Today Indian healthcare is perceived to be
on par with global standards. Some of the top Indian hospitals and doctors have
strong international reputation. But the most important factor that drives medical
tourism to India is its low cost advantage. Majority of foreign patients visit India
primarily to avail of “First World Service at Third World Cost”.


Source: Business World India and Indian Brand Equity Foundation
As the table above shows, India has significant cost advantages in several health
procedures making it a preferred destination






3.2 The Service Spectrum
India offers a variety of services for overseas patients. The table below presents
a classification of the service spectrum.





3.3 Consumer Profile
The demand for Indian healthcare services primarily comes from three types of
consumers. The table below presents the profile of these three consumer groups:







Though tourism is not the primary need of these consumers, it offers additional
attraction particularly for people traveling for cosmetic surgery and less
complicated procedures.

3.4 Market Players
The major players in Indian medical tourism are: the Apollo Hospitals, Escorts
Hospital, Wockhardt Hospitals, Arvind Eye Hospitals, Manipal Hospitals, Mallya
Hospital, Shankara Nethralaya etc. AIIMs, a public -sector hospital is also in the
fray. In terms of locations – Delhi, Chennai, Bangalore and Mumbai cater to the
maximum number of health tourists and are fast emerging as medi-tourism hubs.





























3.5 India in Medical Tourism – SWOT Analysis
Given below is a SWOT Analysis of the Indian Medical Tourism Industry in its
current state:






3.6 Health Tourism In India – Advantages and Opportunities

•The inflow of health tourists from the West, especially the UK, US and some of the European countries has been on the rise for the last couple of years. Price difference or affordability of the treatment, coupled with quality of doctors are the main reasons for the growing western traffic .

• The quality of Indian hospitals has improved significantly and now matches with the best in any part of the world. India has more than 100 healthcare institutions, which are of international standard.

• Many hospitals in India today have the infrastructure and equipment that match with the best centers in the world, be it transplantations(liver/kidney/heart or bone marrow), cancer treatment, including radiotherapy, neurosurgery, including stereotactic surgery., angioplasty and cardiac surgery(bypass and pediatric)

• Public-Private Partnership combines internal hospital expertise with supply chain and logistics expertise.

• The medical tourism industry which is estimated to be worth Rs 1500 crores annually has not only the potential to generate substantial forex earnings but also provide employment opportunities for the large pool of skilled labor available in India, according to Dr. PC Reddy, chairman, Apollo Hospitals Group, India.

• According to Group President Pratap C.Reddy, the annual health bill of people from Afro-Asian countries seeking treatment outside their country is $10 billion. If India can tap even a fraction of that market, the potential is enormous.
Joint Commission Accreditation of Healthcare Organizations (JCAHO)
















3.7







































4 Lessons from International Success Stories

The success stories from across the world provide significant strategic inputs for
the development of a strategy for India.

4.1 The Case of Cuba

Cuba is one of the earliest successes in medical tourism industry. The country
successfully tapped the demand for medical tourism from Latin-American
countries. Cuba’s success can be attributed to the strategic push provided by
government through State-Owned Companies. The two main ingredients of
Cuba’s success were:

4.1.1 Promoting Privatization of HealthCare
The government promoted private investment in healthcare to increase the
supply of high quality and specialized healthcare. Healthcare was accorded
infrastructure status and laws enacted to increase participation of private
entrepreneurs. One example is allowing treatment for skin diseases using human
placenta that was banned elsewhere.

4.1.2 Centralized Marketing through SERVIMED
The government centralized promotion of health services abroad by entrusting
the responsibility to SERVIMED a newly formed public company. SERVIMED
coordinated with tour operators and travel agencies to develop health packages.
The package included travel in Cuba’s national airline, 24 hours assistance, and
companion personnel for the patient, repatriation, and post-surgery controls. To
support efficient marketing, SERVIMED also opened offices in Argentina, Brazil,
Chile, Mexico, and Venezuela.
The two-pronged strategy successfully resulted in 30,000 patients visiting Cuba
in 1997 for treatment earning US$ 30 million foreign exchange.

4.2 The Case of Thailand

A more recent success story is that of Thailand. Thailand is one of the world's
leading healthcare destinations with a forecast of 1 million overseas patients for
the current year. The main reasons for Thailand’s success are:

4.2.1 Inter-Sectoral Coordination
The Thai government realized early the need for coordination across various
sectors to realize the industry’s potential. Hence it developed a common vision,
strategic direction, joint-strategy and shared objectives for various sectors in
order to facilitate better coordination between the concerned players – the
Ministries of health, tourism, foreign affairs and other bodies like Thai Airways
Tourism Authority of Thailand.

4.2.2 Effective Marketing - Tourism Authority of Thailand
The Tourism Authority of Thailand (TAT) has played a stellar role in providing
integrated marketing Thai tourism abroad. TAT has more than 18 offices
worldwide and has won several international credits for developing excellent
marketing campaigns targeted at tourists. TAT has so far been extremely
successful in marketing Thai health services also.

4.2.3 Focus on Hospitality
Thailand heavily focuses on hospitality to provide superior consumer experience
and building brand equity. For example the Bumrungrad Hospital in Bangkok
provides hospitality services that include: pick up from Airport, language
interpreters for 18 languages and an in-house Starbucks and McDonalds to cater
to tourists from U.S and U.K.

4.2.4 Building Infrastructure
Thailand built a strong health infrastructure during the economic boom by
encouraging private and public participation. In 1996 alone Thailand spent a
whopping 7% of GDP on healthcare. Priority was also given for Foreign Direct
investment in healthcare sector with Thai Government processing 3000 FDI
proposals in just four years.
To summarize, these cases emphasize the need for a strong government role in
improving coordination, infrastructure and integrated marketing.

























5 India - Strategic Thrusts for the Future

The following section lays down the strategy for India to achieve leadership
position in medical tourism. The strategy largely draws from the discussions in
previous section.

5.1 Role of Government
The role of Indian Government for success in medical tourism is two-fold:
Acting as a Regulator to institute a uniform grading and accreditation
system for hospitals to build consumers’ trust.

Acting as a Facilitator for encouraging private investment in medical
infrastructure and policy-making for improving medical tourism.
For facilitating investment the policy recommendations include:
1. Recognize healthcare as an infrastructure sector, and extend the benefits
under sec 80-IA of the IT Act. Benefits include tax holidays for five years
and concessional taxation for subsequent five years.
2. The government should actively promote FDI in healthcare sector.
3. Conducive fiscal policies - providing low interest rate loans, reducing
import/excise duty for medical equipment
4. Facilitating clearances and certification like medical registration number,
anti-pollution certificate etc.
The above measures will kick-start hospital financing, which is struggling now
due to capital intensive and low efficiency nature of healthcare business.
For facilitating tourism the government should:
1. Reduce hassles in visa process and institute visa-on-arrival for patients
2. Follow an Open-Sky policy to increase inflow of flights into India
3. Create Medical Attachés to Indian embassies that promote health services
to prospective Indian visitors

5.2 Formation of National Association of Health Tourism (NHAT)
The promotion of medical tourism has so far been very fragmented with initiatives
by few states and private hospitals. The earlier discussions clearly underline the
need for presence of an apex body that can coordinate the promotion of medical
tourism abroad. In the Indian context too, this has been successfully
demonstrated in the software industry by NASSCOM. It is therefore essential to
form an apex body for health tourism – NAHT. The NAHT should be formed as
an association of the private hospitals operating in the industry. The main agenda
for NAHT will be:

1. Building the India Brand Abroad: Classify the target consumer segments
based on their attractiveness and position the India Brand based on the three
main value propositions – high quality service, value for money and
destination diversity. An integrated marketing Communications campaign
using print, media and road shows should be developed.

2. Promoting Inter-Sectoral Coordination: The NAHT should take up the
responsibility of aligning the activities of various players – Tourism
Department, Transport Operators, Hotel Associations, Escorts personnel etc.

3. Information Dissemination using Technology: NAHT should set up a
portal on medical tourism in India targeted at sharing information and
enabling online transactions.

4. Standardization of Services: NAHT should also focus on establishing price
parity for similar kinds of treatments in various hospitals and ensure the
hospitals adhere to high hygiene and quality standards.

5.3 Role of Private Sector
The action items for private sector are:
1. Increased participation in building infrastructure: To achieve its full
potential, it is estimated that India needs an investment of Rs.100000 to
140000 Crores by 2012. Since the government can afford only a third of the
amount, the private sector should play an active role to fill the gap.

2. Integrate Horizontally: Private hospitals should also plan to integrate
horizontally for providing end-to-end healthcare solutions to consumers. For
example Apollo multi specialty hospitals is already planning to set up spas
and alternative mediclinics to attract more foreign tourists.

3. Joint Ventures / Alliances: To counter increasing competition, Indian
hospitals should tie-up with foreign institutions for assured supply of medical
tourists. Specifically tie-ups with capacity constrained hospitals and insurance
providers will provide significant competitive advantage.

5.4 Value Innovation Through MEDICITIES
Another successful example of the software industry is the establishment of
Export Oriented Software Technology Parks. This model can be successfully
replicated in the medical tourism industry by means of MEDICITIES. Each
MEDICITY could be a self-sustained healthcare hub with super specialty
hospitals of international standards, ancillary facilities, research institutions,
health resort, rehabilitation centers and residential apartments. This model can
be floated through a public-private partnership. The government will provide land
and ancillary services and the private players will provide infrastructure and
services. From the consumer’s point of view, the MEDICITIES will offer superior
value at affordable prices. From industry’s point of view, this will offer significant
competitive advantage for India.






6 Medical Tourism: Opportunities and Challenges for India’
India's relatively developing medical tourism segment has been anointed by healthcare and tourism industry pundits as the next 'best' thing for the country. According to a McKinsey report, India is poised to generate business worth USD 2.2 billion by 2010, however there are plenty of challenges that need to be addressed for India to become the world's preferred healthcare destination. Prominent among them being the need for proper accreditation and requisite standardisation systems in place, a tripartite synergy between hospitals, tour operators and respective state governments. The panelists for the session comprised Dr R V Karanjekar, chief executive officer, Dr D Y Patil Hospital and Research Centre, Mumbai; Anupam Verma, director administration at PD Hinduja National Hospital, Mumbai; Joy Chakraborty, deputy administrator at Sri Ramachandra Medical Centre; Gour Kanjilal, regional director (Western & Central Region), Indiatourism, Mumbai and Mahendra Jain, commissioner of tourism, government of Karnataka.
In 2004, India treated and cared for 1.8 lakh patients. This number is poised for substantial growth - 25-30 per cent in 2005. The panel agreed that India's main USP in this regard was the prospect of low-cost treatment by highly professional doctors. India will have to project itself as being a holistic medical destination to get an edge over other countries. "India offers not just treatment but spiritual and mental healing as well. We need to club together a couple of 'pathies' because we have a very strong base of alternative healing therapies like yoga, naturopathy, ayurveda, etc.
Creating awareness about India's facilities is a must to establish credibility in foreign markets. The standardisation of a price band for graded hospitals and a quality assurance model should be taken up immediately to take medical tourism ahead. "CRISIL and ICRA have started something on price bands but are facing few challenges at the moment. What we can do, is try and follow the Thailand model. Thailand first developed its standards as per Joint Commissioner International (JSI) which helped them to get approval from NHS of UK. So convincing medical insurance companies was not a problem." Talking about initiatives that can help in generating the right exposure.It is time we create a database on the facilities on offer, the number of patients received and from which market, reason for choosing India, their length of stay, etc. These data can provide pointers to help us in devising country-specific promotional strategies."
A joint task force on medical tourism has already been set up by ministry of tourism in collaboration with ministry of health which will look into quality assurance, standardisation of price, global networking and improving visibility. At the same time, the government should introduce a medical visa to facilitate long-stay he opined. Anupam Verma very ably moderated the two hour seminar and responded to queries from the doctors and the tour operators.
As the hon secretary of Maharashtra Medical Tourism Council formed last year in collaboration with FICCI, he has been actively involved in promoting the state as the preferred medical tourism destination abroad.
Just as the primary motivator for medical tourism is cost, medical tourism is largely limited to individuals paying for procedures out-of-pocket. While in some circumstances insurance providers and private insurers will pay—at least for the cost of a procedure, if not for travel costs—for the most part they do not. As long as public and private insurers limit their members to hospitals at home, the market for international medical tourism will remain limited. Moreover, some other limitations exist:
The third world, with its image of overcrowded cities, poor infrastructure, and inadequate health care for its own inhabitants, will continue to have difficulty appealing to Westerners, no matter how modern and gleaming the hospitals that cater to them.
Follow-up care is limited to the individual’s stay at the foreign medical facility. Complications and post-operative care are then left to doctors as far as thousands of miles away. Standards of care are much less developed in countries such as India and Thailand, so an individual must be particularly careful to choose a hospital with high standards and
accreditation. Malpractice laws are weak in countries like India and Thailand, which leaves patients with limited recourse if something goes wrong. Of course, this contributes to low costs, as malpractice insurance is much cheaper in these countries. Regardless of these issues, medical (and dental) tourism seems set to grow and to offer patients in
the developed world who fall through the cracks of private and public insurance a cost-effective way to “outsource” their medical needs to a low-cost provider.

















6.1 GROWTH OF THE MEDICAL TOURISM INDUSTRY

The countries where medical tourism is being actively promoted include Greece, South Africa, Jordan, India, Malaysia, Philippines and Singapore. India is a recent entrant into medical tourism. According to a study by McKinsey and the Confederation of Indian Industry, medical tourism in India could become a $1 billion business by 2012. The report predicts that: “By 2012, if medical tourism were to reach 25 per cent of revenues of private up-market players, up to Rs 10,000 crore will be added to the revenues of these players”. The Indian government predicts that India’s $17-billion-a-year health-care industry could grow 13 per cent in each of the next six years, boosted by medical tourism, which industry watchers say is growing at 30 per cent annually.

In India, the Apollo group alone has so far treated 95,000 international patients, many of whom are of Indian origin. Apollo has been a forerunner in medical tourism in India and attracts patients from Southeast Asia, Africa, and the Middle East. The group has tied up with hospitals in Mauritius, Tanzania, Bangladesh and Yemen besides running a hospital in Sri Lanka, and managing a hospital in Dubai.

Another corporate group running a chain of hospitals, Escorts, claims it has doubled its number of overseas patients - from 675 in 2000 to nearly 1,200 this year. Recently, the Ruby Hospital in Kolkata signed a contract with the British insurance company, BUPA. The management hopes to get British patients from the queue in the National Health Services soon. Some estimates say that foreigners account for 10 to 12 per cent of all patients in top Mumbai hospitals despite roadblocks like poor aviation connectivity, poor road infrastructure and absence of uniform quality standards.

Analysts say that as many as 150,000 medical tourists came to India last year. However, the current market for medical tourism in India is mainly limited to patients from the Middle East and South Asian economies. Some claim that the industry would flourish even without Western medical tourists. Afro-Asian people spend as much as $20 billion a year on health care outside their countries – Nigerians alone spend an estimated $1 billion a year. Most of this money would be spent in Europe and America, but it is hoped that this would now be increasingly directed to developing countries with advanced facilities.







6.2 PROMOTION OF MEDICAL TOURISM

The key “selling points” of the medical tourism industry are its “cost effectiveness” and its combination with the attractions of tourism. The latter also uses the ploy of selling the “exotica” of the countries involved as well as the packaging of health care with traditional therapies and treatment methods.

Price advantage is, of course, a major selling point. The slogan, thus is, “First World treatment’ at Third World prices”. The cost differential across the board is huge: only a tenth and sometimes even a sixteenth of the cost in the West. Open-heart surgery could cost up to $70,000 in Britain and up to $150,000 in the US; in India’s best hospitals it could cost between $3,000 and $10,000. Knee surgery (on both knees) costs 350,000 rupees ($7,700) in India; in Britain this costs £10,000 ($16,950), more than twice as much. Dental, eye and cosmetic surgeries in Western countries cost three to four times as much as in India.

The price advantage is however offset today for patients from the developed countries by concerns regarding standards, insurance coverage and other infrastructure. This is where the tourism and medical industries are trying to pool resources, and also putting pressure on the government.
In India the strong tradition of traditional systems of health care in Kerala, for example, is utilised. Kerala Ayurveda centres have been established at multiple locations in various metro cities, thus highlighting the advantages of Ayurveda in health management. The health tourism focus has seen Kerala participate in various trade shows and expos wherein the advantages of this traditional form of medicine are showcased.

A generic problem with medical tourism is that it reinforces the medicalised view of health care. By promoting the notion that medical services can be bought off the shelf from the lowest priced provider anywhere in the globe, it also takes away the pressure from the government to provide comprehensive health care to all its citizens. It is a deepening of the whole notion of health care that is being pushed today which emphasises on technology and private enterprise.

The important question here is for whom is ‘cost effective’ services to be provided. Clearly the services are “cost effective” for those who can pay and in addition come from countries where medical care costs are exorbitant - because of the failure of the government to provide affordable medical care. It thus attracts only a small fraction that can pay for medical care and leaves out large sections that are denied medical care but cannot afford to pay. The demand for cost effective specialized care is coming from the developed countries where there has been a decline in public spending and rise in life expectancy and non-communicable diseases that requires specialist services.




7 Conclusion

The medical tourism industry offers high potential for India primarily because of
its inherent advantages in terms of cost and quality. However the competition is
getting heated up and the success in future will largely be determined by
development and implementation of a joint strategy by various players in the
industry. The government should step in the role of a regulator and a facilitator of
private investment in healthcare. An apex body for the industry needs to be
formed to promote the India brand abroad and aid inter-sectoral coordination.
Joint ventures with overseas partners and establishment of MEDICITIES will help
in India building a significant advantage and leadership position in the industry.

The healthcare has become global concern and the service is intangible in nature. In fiercely competitive global market where information is shared instantly, consumers will virtually have all the knowledge and choices in the world. India has bright prospects to emerge as the global destination for medical tourists to avail world-class quality healthcare facilities at cost advantage. As the medical tourism industry is growing exponentially, hospitals need to develop efficient logistics system for continuous improvement to meet the requirements of international patients and to attain sustainable competitive advantage. Health opportunities for foreign patients may lead to better standards at home. Government has to take active role in promoting the health tourism by providing the infrastructure facilities, creating network and connectivity with health, tourism, and other related industries, tie-ups with other countries. Logistics information system will enable sharing information and effective handling of international patient care from the point of receiving to the point of sending back. Medical Tourism will help in maintaining good international relations, cross border relations, trade relations, exchange of manpower and technology among counties. To capitalize the opportunities globally, a coordinated strategy is required by upgrading and restructuring the hospital services and to attract international market.

















8 References
PAPERS
1. Rupa Chanda, ‘Trade in Health Services’, Bulletin of the World Health
Organization 2002;80(2); Pg: 158-163
2. David Diaz Benavides, ‘Trade Policies and export of health services – A
Development Perspective’, World Health Organization Publication, Pg 53 - 69
3. India Brand Equity Foundation,’ India is far Cheaper than Thailand’, March
2004, www.ibef.org
4. IDFC Ltd, ‘ Investing in Private Healthcare in India – Funding Robust
Business Models’, December 2002
5. Mueller H and Kaufmann E L, ‘ Wellness Tourism: Market Analysis of a
Special Health Tourism and Implications for Hotel Industry’, Journal of
Vacation Marketing, Vol 7(1), Pg 6 – 17, July 2000

ONLINE ARTICLES
“The Health Travellers” – Cover Story, Business World India
Link: http://www.businessworldindia.com/Dec2203/coverstory01.asp
‘India – Health Care Industry’ – India Brand Equity Foundation
Link: http://www.ibef.org/artdispview.aspx?art_id=3361&cat_id=119
“Prospects for Health Tourism Exports for the English Speaking Carribean” –
Consultancy Report, World Bank – SSDS Inc September 1995
Link: http://www.ssds.net/ssds-products/health-tourism-rev1.doc




BOOKS
Kelly Lee, “Globalization and Health – An Introduction”, Palgrave Macmillan
Publication, 2003
Mckinsey – CII Study, “Healthcare in India – The Road Ahead”, Mckinsey &
Company, 2002





























9 Appendix
9.1 Size of Medical Tourism Market in India – 2012





























Note: If Medical tourism were to reach 25% of private up market, Rs. 5000 – Rs.
10000 Crore will be added to the revenues of these players. Medical tourism will
then represent 3 to 5% of total delivery market in 2012.

9.2 Economics of HealthCare Business


From the table above we find that for private investment in hospitals to be
sustainable, it is essential for government to provide incentives in terms of tax
holidays, low cost loans and elimination of import/excise duties on equipment.