Light at the end of the medical tourism tunnel?

Following my outpourings on the “Outlook for Medical Tourism in 2010”, I am pleased to say that I’ve received some positive feedback (always a good thing.... I’ll keep on blogging!). And some reassurance that I am not alone in my view of the medical tourism world.

In particular, one of the long established medical tourism facilitators told me “how it was” in 2009 and how they think it might be in 2010. It’s refreshing to hear someone be open and upfront about their business experiences in medical tourism and the challenges that are facing people in the business.

I’d like to share some of these comments with others in the medical tourism world. Here is what it was really like in 2009 for one medical tourism business, a business that is well established, well run, and isn’t a “one man and his dog” outfit. I’m going to respect their confidentiality and not name the company concerned.

The view from the marketplace

Here’s what our medical tourism facilitator had to say about 2009:

“We have dabbled in the elective surgery market and have come to the same conclusions as you.... that to continue in this sector we would need to consolidate and concentrate on niche or rather more specialist sectors. Otherwise, we are finding ourselves becoming a "Jack of all trades and Master of none".

Last year was a really bad year. We were very busy with enquiries, but our conversion rate was disappointing and for those that did convert, the average spend was down. We have put the conversion problems down to a 50/50 mix of:

1. Recession - people not spending, or when they are travelling for treatment, they are spending less.
2. Competition - it seems in the last 18 months that every person in Europe, with a spare room and who knows a dentist, has jumped on the medical tourism bandwagon.

Another factor that has not helped is the pound sterling rate against other currencies, especially the Euro; this has meant a 20% increase in costs and prices. This does not only apply to the treatment cost but the patient stay while they are away. (Hotel rates are more expensive, eating out is more expensive etc.) The effect has been significant. Our patient numbers fell by 30% in 2009 and the average spend per patient dropped by 25%.”

So, a difficult time for this medical tourism business. But it is not unique. Some dental clinics in Europe have been relating similar experiences. One major implant centre in Budapest has reported overseas patient numbers down by more than 20% and a similar 25% fall in average spend per patient.

Do these experiences reflect the reality of the medical tourism business in recession?

Lies, damned lies and statistics?
The UK is one country where we count stuff. We have an Office for National Statistics and they employ around 4,000 civil servants who count stuff...including medical travellers. At Treatment Abroad, we do our bit to keep the civil servants in jobs by buying the data that they produce – specifically, the International Passenger Survey (IPS), a survey of a random sample of passengers entering and leaving the UK by air, sea or the Channel Tunnel. The IPS attempts to identify the number of people both travelling into the UK and out of the UK where the prime reason for travel is medical treatment (as opposed to business or a holiday).

Now.... you need to take these statistics with a very large pinch of salt. Statistics contain statistical errors and the smaller the sample, the bigger the risk of the error.

Here is a graph of IPS data showing outbound medical travellers from the UK from 2002 to 2009 (projected from 3rd quarter statistics). The sample size in this data is small - the number of actual travellers interviewed in each quarter who stated that their prime reason for travel was medical is around 50 to 100. So, there is room for wide variations in the data!

But, it may well be a reflection of the actual trends in UK medical tourism and for 2009 may indeed reflect the experiences of many in the marketplace who have seen the number of medical tourists in decline over the last 18 months or so, since the credit crunch hit.

Light at the end of the tunnel?
Our medical tourism facilitator quoted above has a more positive outlook for the future:

"We have already seen an increase in booking numbers for dentistry in 2010. January is already 100% up on January 2009 (and nearly the same number as in 2008, so something is starting to change.”

With some good news on the economic horizon in the UK, we may be seeing an increase in consumer confidence. House prices are increasing, and we have seen a return to economic growth, albeit not as good as many would have hoped. We wait to see what the effect may be on unemployment. But, like many industries, medical tourism follows the trends in the economy as a whole. Medical tourism is not immune to recession and certainly is not flourishing in it.

The way forward.. focus and think niche
Back to our medical tourism facilitator, who is planning the strategy for 2010:

“Our progress for 2010 will be to expand the dentistry further and concentrate more on the cosmetic surgery. We had taken a step back on cosmetic surgery in 2009, due to the difficult climate and similar to your (Keith Pollard’s) points about offering too much, we have recognised that rather than be a "Jack of all trades.....", we need to have a separate department. Having the same staff switching between the two products (dentistry and cosmetic surgery) does not really work.”

And our medical tourism facilitator concludes with a message for all in the industry:

“I totally concur with the conclusions of your article, and recognise that this medical tourism industry is not as simple and as great as people have made out. Only the companies that keep adapting and recognise the importance of focusing and having the correct resources to manage a particular sector of this industry will survive or be commercially viable.”