Medical Tourism: Surviving the Global Recession

(page 2 of 2)

You might think tough economic times would make more people interested in saving money by having their operations in low-cost hospitals in Asia. But with the U.S. unemployment rate at 6.5% and rising, more Americans cannot afford to be jetting off to Asia for health care right now, says Toral. While the price of an Asian operation might save uninsured American patients tens of thousands of dollars, the out-of-pocket expenses might still amount to $10,000. "That's $10,000 they don't have," Toral says. "Joe the Plumber may need a hip replacement, but he's going to have to wait."

Asian hospitals haven't been the only ones counting on a big increase in demand. Startup companies in the U.S. hoping to serve the needs of medical tourists have sprung up in the past few years. The goal was to develop a niche for themselves by handling all the logistics for Americans traveling abroad for medical care. Now the crisis is slowing some of their plans, too. For instance, Planet Hospital, a Southern California startup, has sent more than 2,000 patients to overseas hospitals. It has been working to expand its business by teaming up with insurers interested in providing an overseas option for members. "We are working desperately hard to create an insurance product for people to pay low premiums in exchange for agreeing to go overseas for certain medical procedures," explains Rudy Rupak, CEO of Planet Hospital. "That will drive a lot more patients."

Too Early to Judge?

But that will have to wait. Rupak says the company had been negotiating with a major U.S. insurer but had to push back those plans after the insurer became a prominent victim of the financial crisis. Now Rupak says the earliest Planet Hospital will have such a plan ready will be the end of next year.

Rupak and others in the industry insist, however, that the problems facing the medical tourism industry won't hinder growth over the long term. They point, for instance, to a request from General Motors (GM) earlier this year for proposals to provide an overseas health option for its employees.

It may simply be too early to judge what direction the medical tourism industry is headed in and how the global recession will affect it. Josef Woodman, author of Patients Beyond Borders, recently discussed two new reports on the number of people going overseas for treatments. The first, from consulting giant McKinsey, said that between 60,000 to 85,000 people globally went to other countries for treatment in 2007. The second, from Deloitte, was radically different—it said 750,000 people from the U.S. alone went overseas.

"The wild discrepancy speaks to how early the market for medical travel is," Woodman explained. "The truth of those numbers is somewhere in between."

While President-elect Barack Obama has promised to tackle the health-care crisis in the U.S., industry executives are confident that whatever solution Obama and Congress come up with will still create demand for lower-priced options in Asia and elsewhere. "We see the demand for global-destination medical travel just accelerating over the next several years," says Daniel Snyder, chief operating officer of , a Singapore-based hospital operator whose largest shareholder is U.S. private equity group TPG. "As the economy in the U.S. is in dire straits, people will be looking for more options."

By next year, "most major health plans will offer an option for destination medical travel," he predicts. "You will have millions of people sign up. The economics will mandate it."

Einhorn is Asia regional editor in BusinessWeek 's Hong Kong bureau. With Zoe Galland in New York