Medtech in the Fastest Growing Medical Tourism Markets of AsiaPac

AsiaPac is the fastest growing region in the global medtech market. This growth is fueled by public healthcare reforms, but even more so by the rapidly expanding private sector. The driving and crucial role of medical tourism in this growth is often cleanly forgotten and omitted.

The situation in 2017

The magnitude of medical tourism is of decisive importance to product and service strategies, and even more pressingly, to commercial tactics and processes. In most Association of Southeast Asian Nations (ASEAN) countries, medical tourism represents a third or more of private hospital revenues.

Respectively, hospital groups are upgrading and expanding their infrastructure and patient capacity; new investors are entering the private care segments. The accompanying trend is a shift from decentralized systems to more centralized purchasing and central warehousing.

Competition between countries and hospitals is intensifying; cost pressure, quality dilution, and staff shortages are becoming the rule.

Historical and forecasted CAGR % HC expenditure per capita of select Asia-Pac nations (2010-2020)Graph 1. Historical and forecasted CAGR % HC expenditure per capita of select Asia-Pac nations (2010-2020)

Numbers. How big is medical tourism?

In 2016, 105 to 120 million (m) medical tourists travelled abroad to seek healthcare services. In the coming 3 years, this number will increase annually by 10 to 14%.

Worldwide, medical tourism represented €150 billion (bn) in 2016 and is expected to grow to €200 bn by 2020. It is concentrated in following regions, attracting different patient groups:

  • North America: attracting patients from developing countries
  • South America: mainly attracting North American patients
  • W Europe: attracting patients from neighboring countries
  • E&C Europe: attracting patients from W Europe (low cost for care and dental services)
  • Middle East: mainly attracting Arab & African patients
  • India and SE Asia: attracting patients from neighboring countries and from all over the world

Looking at the global HC market, Southeast Asia is developing faster than the other regions; growing with particular strength are the private sectors, and notably, medical tourism. In 2016, the medical tourism sector in AsiaPac accounted for 10 m patients and €15 to €17 bn in revenues, and will continue to grow 15 to 17% annually for the coming 3 years.

AsiaPac healthcare tourism

Table 1. Medtech patient numbers and revenue value

Foreign patients are a major revenue generator for private hospitals in the region. Their share represents at least 40 to 55% of the private hospitals’ revenue in countries such as Singapore and Malaysia. In Thailand, foreign patients account for around 25% of the revenue, and 10 to 15% in India, the Philippines, South Korea and Taiwan.

Foreign patients are often leisure tourists or expats, but the bulk are specific healthcare-seeking tourists.

Here are some demonstrative consequences of this growing activity:

  • Private hospitals are upgrading their facilities and increasing capacity.
  • The sector is attracting more international hospital groups and investors to enter the market.
  • Competition between care providers is increasing, leading to differentiating investments and services, but also to increased cost pressure and quality dilution.
  • Countries seeking to develop medical tourism are teaming-up with large multinational players (e.g. Mayo Clinic, John Hopkins,…).

The growth of medical tourism in SE Asia has a direct and tangible impact on the medtech market.

SE Asia and India together represent more than 10% of the global medtech market with over €50 bn, and are growing faster (7,5%) than any other region in the world.

AsiaPac Medtech market values and annual growth per region

Table 2. Medtech market values and annual growth per region

The following HC tourism market dynamics affect medical equipment and device providers in a variety of ways, from product offering to customer services. These dynamics also create new opportunities for global providers and local medtech companies.

  • Shift to more day-care and ambulatory procedures, in order to deal with staff shortages and improve cost-effectiveness.
  • Increased need for telemedicine and e-health, to improve the continuum of care.
  • Increased group purchasing, central warehousing, innovative IT-based solutions and value-chain solutions, to improve or defend their competitive advantage.
  • Shifts from product-focused offerings to customized value-based solutions (e.g. insulin self-administering kits).

Drivers. What fuels healthcare tourism in SE Asia?

The globalization of healthcare is fueled by push and pull factors.

Push:

  • Wealthy patients seeking qualitative care in high standard settings in emerging countries.
  • Middle class and underinsured patients in developed countries are feeling disenfranchised by their national healthcare system. Due to this, they are shopping outside of their organized medical system to find services that are affordable, timely, or simply available. HC insurers are motivating patients to seek more cost-effective HC provision.

Pull:

  • Triggered by the abounding opportunities of medical tourism, governments are actively promoting their countries/hospitals to attract foreign patients shopping for HC services.
  • Healthcare providers deploy referral systems to attract patients and service-companies, offering innovative products to guide patients in their choice of country and hospital.
  • To meet the medical and patient demands, entrepreneurs are building technologically advanced facilities using foreign and domestic capital. They are hiring physicians, technicians and nurses trained with international standards and accreditations; where qualified personnel are not available locally, expatriates are recruited.

The main drivers for the growth in SE Asia are:

  • Long waiting lists in developed countries.
  • Low cost of medical treatment in medical tourism destinations.

Simultaneously, the reduction of health benefits by national HC insurance programs and employers alike are pushing patients to seek affordable care in the global market of privatized healthcare.

  • Typically, National Health Insurance in developed countries does not cover all types of care, e.g. cosmetic surgery, certain dental procedures, etc. are often not reimbursed.
  • Greater affordability of international air fares to facilitate intercontinental travel.
  • State-of-the-art technology pertinent to healthcare services have been adopted by new service providers, serving as middlemen to assist patients and local hospital networks to investigate and arrange healthcare
  • Destination nations regard medical tourism as a resource for economic development. E.g. the Ministry of Tourism in Thailand, Malaysia and India have been promoting medical tourism fiercely for their respective countries.
  • Private hospital chains and investors perceive medical tourism in Asia-Pac as an attractive business opportunity and invest in infrastructure, equipment, staff and services

 

In part 2 of our exploration of medical tourism in Asia-Pac, we will dive deeper into specific countries within the region, their market size and noteworthy characteristics; followed by a list of the key procedures being sought out within this market, new market stakeholders, and the challenges that medical tourism is facing.

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About Bart Van den Mooter

Bart is the founder of TforG and works closely together with over 50 global companies such as Abbott, Baxter, GE, J&J, Medtronic, Philips, Stryker and Covidien. In this function, he spends a lot time with Key Opinion Leaders and Health Policy makers in Europe and in Emerging Markets. He graduated at the Polytechnic University of Leuven with a Master of Engineering and has an MBA (Flanders Business School).