International Conference on Arts, Economics and Literature (ICAEL'2012) December 14-15, 2012 Singapore

Medical Tourism Competition and Comparative Advantages: The Case of India

Dr.I.Sundar

AbstractAs medical tourism becomes more attractive to many

countries, there will be much more international competition and rivalry. Therefore, with medical treatment being equal across many countries, the tourists would begin to select their target destination based on other reasons. This paper deals with concept of medical tourism and its emerging trends. It outlines the need for medical tourism, medical tourism segments and major hubs in medical tourism. This paper highlights the growing competition in medical tourism. This paper makes a special note on Indian medical tourism, Indian medical tourism scenario and comparative cost advantage of Indian tourism. This paper concludes with some policy measures to improve the performance of medical tourism in India.

deal with the increase in demand does, in many cases, lead to compromised levels of service and decreased access through long waiting lists and high costs. This drives many individuals to seek alternatives to domestic health care. III. MEDICAL TOURISM SCENARIO IN INDIA In 2009, over 300,000 patients arrived to India for medical treatment from over 30 countries around the world, Viz USA, Canada, UK, Russia, the Middle East, Kenya, Uganda, Tanzania, Sri Lanka, The Central Asian Republics. A 2009 report by the Confederation of Industries (CII)McKinsey forecasts that, medical tourism will generate US$2.4 billion during 20092012 for India by attracting 1.1 million health tourists, up from 150,000 in 2002.According to the Investment Commission of India, medical tourism has witnessed a phenomenal expansion in the past four years, growing at over 12% per annum. As per a recent CIIMcKinsey report, growth in this sector can contribute 6-7% to the overall GDP growth and increase employment by at least 2.5 million by 2012. According to a Press Trust of India news report, nearly five lakh foreign patients visited India in 200809 seeking less expensive treatment. Though the trend of foreigners coming to India for treatment has gained momentum only in the past five years, the country is giving tough competition to other medical destinations like Singapore, Thailand and Malaysia. While nearly 5 lakh medical tourists visited India in 2008-09, the figure for Bangkok and Phuket (Thailand) alone stands at around 6 lakh visitors. Statistics for Malaysia show that 4.25 lakh medical tourists visited the country in 2009. Medical tourism is expected to generate revenue of Rs10,000 crore by 2012 and over 3,50,000 patients from across the world are expected to come to India for treatment. Aarex India said countries like the US, UK, Canada, Russia, the Middle-East, Tanzania, Kenya, Uganda, Sri Lanka, Pakistan, Mauritius and the Central Asian Republics prefer Indias affordable medical tourism. According to economic times of India. India's medical tourism sector is expected to grow at an annual rate of 30 percent to become a Rs 9,500-crore industry by 2015 as foreign arrivals will increase to avail treatment at lower costs. "The cost of surgery in India is one-tenth of what it is in the US and Western Europe and sometimes even lesser.

Keywords Medical Tourism, Competition, Advantages, India. I. INTRODUCTION EDICAL tourism is a term initially coined by travel agencies and the mass media to describe the rapidlygrowing practice of traveling to another country to obtain health care. According to Mary Tabacchi, Health Tourism is any kind of travel to make oneself or a member of any family healthier. More recently the phrase "Global Healthcare" has emerged, and may replace the earlier terms. Such services typically include elective procedures as well as complex specialized surgeries such as joint replacement, cardiac surgery, dental surgery, and cosmetic surgeries. The provider and customer use informal channels of communicationconnection-contract, with less regulatory or legal oversight to assure quality and less formal recourse to reimbursement or redress. II. NEED FOR MEDICAL TOURISM There are several reasons for the increase in medical travel. First, the demographics of the developed nations are causing a significant increase in demand for health care. In Japan, the United States of America, the United Kingdom and many other European nations, the proportion of the population older than 60 years, in relation to the total population, is increasing rapidly. Similar trends are being seen in many countries across the world. At the same time, life expectancy in most countries has also increased steadily over the years; the combined result is significant strain on national healthcare systems. The inability of many health-care systems to
Dr.I.SUNDAR is Associate Professor of Economics, Directorate of Distance Education, Annamalai University, Tamil Nadu, India.

135

International Conference on Arts, Economics and Literature (ICAEL'2012) December 14-15, 2012 Singapore
TABLE I MAJOR PLAYERS IN INDIAN MEDICAL TOURISM INDUSTRY

No. Of Beds

Turnover (Rs. Millions)

% Revenues from International patients 11.9

Major International Markets

SAARC, CIS, East African Countries, Afghanistan Apollo 1500 2010 15 Middle East IndraprasthaNepal, Bangladesh, Sri 650 1650 7.3 Apollo Lanka, Gulf & Africa Hinduja 351 1350 3 African & SAARC Countries Japan, Middle East and Jaslok 376 1080 10 US, African Countries Source: Business Today 2011. TABLE II It could be noted from table 1 that India has five major COST COMPARISON BETWEEN INDIA AND USA players in medical tourism viz Escorts, Apollo, IndraprasthaProcedure US ($) approx. India ($) approx. Apollo, Hinduja and Jaslok. They receive a considerable per Bone Marrow Transplant $2,50,000 $69,200 cent of revenue from the international patient from various Liver Transplant $3,00,000 $69,350 countries. This shows that, significant source of revenues for Heart Surgery $30,000 $8,700 Orthopedic Surgery $20,000 $6,300 such hospitals comes from international patients. The industry Cataract Surgery $2,000 $1,350 is growing rapidly. Government along with other players is Smile Designing $8,000 $1,100 making moves towards making this an important industry. The Metal Free Bridge $5,500 $600 process of standardization has already started. However, Dental Implants $3,500 $900 Government needs to make moves faster so that the Porcelain Metal Bridge $3,000 $600 Porcelain Metal Crown $1,000 $100 opportunity is not tapped by other industries similar to Tooth Impactions $2,000 $125 Tourism. Root Canal Treatment $1,000 $110 India has great resources for tourism. World-class Tooth Whitening $800 $125 medical facilities are already available at many places. Hence, Tooth Colored Composite $500 $30 these two industries can definitely move together that provides Fillings / Tooth Cleaning $300 $90 Source: AMA, June 2007 a bright future for the Medical Tourism Industry. The Medical tourism opportunity is so good that it cannot be ignored. Data presented in table 2 indicate the Cost comparisons Indias medical tourism sector is expected to experience an annual growth rate of 30%, making it a Rs. 9,500-crore between India and USA. It could be noted that bone marrow industry by 2015. Estimates of the value of medical tourism transplant cost is a more than 3 times higher in USA. Liver to India go as high as $2 billion a year by 2012. As medical transplant is more than 4 times higher in USA than India. treatment costs in the developed world balloon out of Heart surgery is also a more than 3 times higher in USA than proportion, with the United States leading the way, more and India. Similarly the cost of orthopedic surgery, cataract more Westerners are finding the prospect of international surgery, smile designing, metal free bridge, dental implants, travel for medical care increasingly appealing. An estimated porcelain metal bridge, porcelain metal crown, tooth number of 150,000 of patients travel to India for low-priced impactions, root canal treatment, tooth whitening, tooth healthcare procedures every year. India ranks second in the colored composite and fillings/tooth cleaning is lower in India world in the medical tourism after Thailand. In 2007, Indian than USA. It could be noted that the cost of breast treatment is hospitals had treated 4.5 lakh foreign patients compared to lower in India than USA. Similarly the cost of face treatment, Thailands 12 lakh. Confederation of Indian Industry (CII) nose treatment, body contouring and non-surgical procedures study forecasts medical tourism could become a US$ 2 billion are cheaper in India. It shows comparative advantages of industry by 2012 (from US$ 350 million in 2006). Private taking treatment in India and it is cheaper in India. All the medical procedures by Indian Medical Holiday are healthcare is expected to account for 75 percent of this at very affordable cost than other countries. These all prices spending. are not actual prices and just for your comprehension and will vary case to case. Some of the costs of the procedures are mentioned below for information:Escorts 326 2180

136

International Conference on Arts, Economics and Literature (ICAEL'2012) December 14-15, 2012 Singapore
TABLE III MEDICAL TREATMENT COST COMPARISON IN INDIA OVER OTHER COUNTRIES (PRICES ARE IN USD) Average Cost Average Cost Average Cost Average Cost Medical Treatment Procedure in USA in South Africa in Thailand in India CABG (bypass) 110,000 29,000 14,000 8,000 Double valve replacement 180,000 35,000 11,000 Heart Pacemaker/defibrillator 60,000 25,000 9,000 7,500 PTCA with stent 70,000 22,000 9, 500 7,500 Pediatric Cardiac Surgery 100,000 33,000 N/A 9,100 Hip Replacement(single) Hip Resurfacing (single) Knee Replacement (single) Spinal Fusion Laproscopic Gastric Banding Major Dental Implants 130,000 N/A 60,000 90,000 50,000 30,000 24,000 N/A 19,000 32,000 20,000 19,000 9,000 9,000 9,500 12,000 8,500 9,000 7,500 8,700 7,600 7,000

Source: www.abilemedicaltourism.com It is observed from table 3 that cost of treatment in India is lesser than Thailand, South Africa and United States. The patients who are taking medical treatment in India are expected to enjoy comparative cost advantage and

it is the primary reason that India has attracted a large number of medical tourists from Asian countries, African countries, SAARC countries, Middle East countries and event developed countries.

TABLE IV MEDICAL COST COMPARISON BETWEEN INDIA AND OTHER COUNTRIES Medical Procedure Angioplasty Heart Bypass Heart Valve Replacement Knee replacement Hip resurfacing Hip Replacement Breast Implants Rhinoplasty Lap Brand/ Bariatric Hysterectomy Dental Implant USA (USD) 57000 144000 170000 50000 30000+ 43000 10000 8000 8000 15000 11000 Mexico (USD) 17100 21000 31000 11500 13400 13800 9000 5000 9200 7500 1000 Cost Rica (USD) 14000 26000 31000 12000 13000 13000 4000 6000 9000 6000 1100 India (USD) 8000 10000 3000 9000 10000 10000 3500 3000 8000 5000 800 Thailand (USD) 10000 26000 24000 14000 18000 16000 5700 5400 14000 7000 1000 Korea(USD) 21600 260000 38000 19000 22900 18450 13600 6000 11500 11000 2000

Source: costcompare.aspx.htm

Table 4 presents data on the cost of medical treatment in India in relation to other countries. It could be noted that UK and South Asian countries. Add to it, the waiting time which is almost nil in case of India. After all, patients health cannot be put at stake due to long waiting lists. The American Medical Association has made a cost comparison study of healthcare in different countries. According to the statistics released by AMA, a knee replacement surgery would cost $40,000 in US, $10,000 in Thailand and $13,000 in Singapore, while the same surgery would cost the person $8500 in India. That gives India a certain edge when it comes to reasonable medical treatments. In
137

addition, Indian doctors are renowned all over the world for their prowess and skills. A heart valve replacement surgery would cost the patients $200,000 in the US and $90,000 in Britain while it would cost $12,500 in Singapore and $10,000 in Thailand. The same procedure in India would cost only $8,000. While a bone marrow transplant would cost $30,000 in India, in US it would cost anywhere between $250,000$400,000 while in UK the cost would be of the order of $150,000. Doctors in Thailand would charge $3,500 for cosmetic surgery while those in US and UK would charge $20,000 and $10,000, respectively. But in India, it costs

International Conference on Arts, Economics and Literature (ICAEL'2012) December 14-15, 2012 Singapore

only $2000. No matter what procedure one undergoes, one is sure to save 75% to 95% of healthcare costs. Besides,
Procedure Face-lift Breast Augmentation Breast Reduction Eyelid Surgery Liposuction Nose Surgery Tummy Tuck Source: healthbase.com United States ($) 20000 10000 10000 7000 10000 7300 8500

India is a great place to explore with rich heritage, architecture and culture.
Thailand ($) 4800 3150 3900 1400 2100 3850 4050 Singapore ($) 6250 8000 8000 3750 5000 4400 6250 India ($) 3100 2200 3000 2200 2500 1800 3400

TABLE V COSMETIC SURGERY (COSTS IN US$)

IV. CONCLUSION AND SUGGESTION It could be seen clearly from the above discussion that on one hand there are examples of Singapore and Dubai where government has direct interest in medical tourism. On the other hand government can play a role of facilitator alone but should determine what medical tourism products would be offered and to whom. Having decided on this, policy should ensure a seamless value chain. Indian healthcare businesses are receiving customers from developing countries (low GDP countries) that need to travel out of their countries for medical procedures and lure them with comparatively cost effective yet good quality medical care in India. Many tourists would come from the neighbouring countries as the cultural assimilation is easier and the cost and effort to travel to a far off destination is more. V. SUGGESTION Good standards at lesser cost will make the state a more attractive, value for money destination. For this we have to improve the physical infrastructure and connectivity. The social environment includes the improvement in human culture and behaviour. People have to be friendly to the visitors and guests. The Government plans to start overseas marketing of India as a medical tourism destination. The government should take more active role for the growth of tourism. It should function as a facilitator and catalyst. There has been a suggestion that Hospitals should be given industry status for power, import of machinery, equipments etc. The Central Government could also help popularize Medical Tourism through Embassies and through Health Ministries in various foreign countries. More financial and fiscal concessions need also be offered to this sector which has tremendous employment and foreign exchange earning potential. Only then they can be encouraged to make the necessary investments needed for up gradation, standardization and accreditation of the medical facilities/institutions. To promote growth in the Indian medical travel industry, the Indian government has plans to improve health
138

infrastructure. The government is currently in the process of increasing the number of hospitals, clinics, and clinical laboratories in urban as well as rural parts of the country. Incentives and tax holidays are being offered to hospitals and dispensaries providing health travel facilities. REFERENCES
[1] [2] [3] [4] Connell, J. (2007). Medical tourism: Sea, sun, sun and ...surgery. Tourism Management, 27, 1093-1100. Medical Tourism. (2005). Medical tourism India: Medical packages to India. Retrieved 08 27, 2010, from Indian Medical Tourism: Turner, L. (2007, September). Canadian medicare and the global healthcare bazar. Policy Options, 73-77. UNESCAP. (2009). Medical travel in Asia and the Pacific- challenges and opportunities. Retrieved January 31, 2011, from http://www.unescap.org /ESID/hds /lastestadd/MedicalTourismReport09.pdf. Cohen, E. (2010). Medical tourism- A critical evaluation. Tourism Recreation Research , 35 (3), 225-238. Ehrbeck, T., Guevara, C., & Mango, P. D. (2008, May). Mapping the market for medical travel. The McKinsey Quarterly Magazine. Yap, J., Chen, S. S., & Nones, N. (2008). Medical tourism: The Asian chapter. Singapore: Deloitte. TRAM. (2006). Medical tourism: A global analysis. Tourism Research and Marketing, ATLAS. Chen, H. C., Kuo, H. C., Chung, K. P., Chang, S., Su, S., & Yang, M. C. (2010). Classification and comparison of niche services for developing strategy of medical tourism in Asian countries. International Surgery , 95 (2), 108-16. Koncept Analytics. (2009). Medical Tourism Market Report. Retrieved 08 30, 2009, from Research and Markets: http://www.researchandmarkets.com/reports/ 1057065/medical_tourism_market_report. Ho, C. F., & Wu, W. H. (1999). Antecedents of Customer Satisfaction on the Internet: An Empirical Study of Online Shopping. Proceedings of the 32nd Hawaii International Conference on System Sciences. Hawaii, USA. Kang, G.-D. (2006). The hierarchical structure of service quality: integration of technical and functional quality. Managing Service Quality , 16 (1), 37-50.

[5] [6] [7] [8] [9]

[10] [11] [12]

[13]