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Sunday, December 5, 2010

Growth of medical tourism in India

While we fret about the rising healthcare and health insurance costs in India, there is the growing trend of tourists from Western Europe, North America and the Gulf visiting India to get themselves treated. This is primarily because of the fact that healthcare costs in India still are significantly lower than in the West, and the quality of healthcare at these private hospitals is comparable to the best in their home countries. A heart valve replacement which costs USD 8000 in India could set the health insurance company back by as much as  USD 150,000 in the United States. A crude rule of thumb is that surgery in India typically costs 1/10 of what it would in the US. Another problem that many of these visitors face is that many of the procedures that they would like done are not considered critical (elective) by their local healthcare system, and thus they would not be able to avail of them under their health insurance policy in their countries. Even though aftercare can become an issue, the benefits far outweigh the negatives as far as these visitors are concerned.

Hospital groups such as Max, Apollo, Fortis etc have aggressive sales arms focusing purely on the medical tourism aspect. Cardiology, cardiothoracic surgery, knee replacement, and cosmetic surgeries are the most in favour as the cost differential is especially marked across these areas. Many of these hospitals have started entering into agreements with the international health insurance companies to reimburse the cost of healthcare of these visitors. In 2007, according to a study by Deloitte, India received almost  half a million medical tourists. The annual growth rate for medical tourism is estimated at 30%. McKinsey estimates that this will be a USD 2 Bn market in 2012. The global medical tourism market is worth USD 60 bn, and thus there is a big scope for India to get a larger share of this pie. The Indian government has been keen to tap this market, and has introduced one year special medical  visas for visitors.

One ill-desired offshoot of growing medical tourism is that the healthcare costs charged by these private hospitals might end going up even for domestic patients. The hospitals, which run as for profit corporate entities, do not need much time to get used to the concept of higher revenues, and will assume it as their natural right (greed, greed!). We have seen that in the IT Industry- as offshoring through India took off, IT costs that the key companies such as Infosys, Wipro, TCS charged to their Indian clients went up. At the end of the day, this is a labour arbitrage game, and with time, the differential will reduce. But that still seems quite some time away. There is something inherently seductive in getting your knee replaced, tummy tucked,  and walking around the monument of love, the Taj Mahal!

Another issue that some activists have is that most of these corporate hospitals have been set up using massive subsidies in the form of cheaper land, lower financing costs and tax breaks. Thus, in a sense, the subsidies are being transferred from the Indian tax payer to the affluent, well heeled tourist. Though there are regulations regarding the free healthcare quota that these private hospitals are subjected to, they find their way around it- like in most things in our country.

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