Medical Tourism in Asia Hit Hard by Global Recession

U.S. patients who either lack health insurance or can’t get coverage for certain procedures have looked towards Asian hospitals for their medical treatment. Recently there have been signs that insurance companies might start actively encouraging this trend to save on costs.

But Bumrungrad has been hit this year. First was the political unrest in Thailand, with anti-government protesters taking to the streets of Bangkok and constant rumors of a military coup. The prospect of instability has discouraged would-be patients from making the trip over. More worrisome for Bumrungrad management, the financial crisis has suddenly made the cost of travel to Thailand from the U.S. more of a stretch for many Americans who might have considered choosing the Bangkok hospital in the past. “We are not predicting robust growth,” concedes an understated Curtis J. Schroeder, chief executive of Bumrungrad, who says the hospital will take the occasion to refurbish its rooms, as many hospital beds are empty.

Analysts are more direct: DBS Vickers Securities predicts earnings will fall 9.2% this year and 20.9% in 2009. “We foresee the number of international and local patients to be scant,” write the Singapore-based bank’s analysts. “Patients  delay unnecessary or nonemergency treatments (i.e. plastic surgery, hip/knee replacement, etc.) and decrease length of stay, as the financial turmoil has caused significant cutback on expenses.”

With the financial crisis turning into a global recession, the outlook across Asia’s medical tourism industry is grim. From Thailand to Singapore to India, hospitals that had been counting on a big influx (BusinessWeek, 3/13/08) of overseas patients are scaling back expectations. Those counting on large numbers of Americans, like Bumrungrad, are especially at risk, says Ruben Toral, CEO of Mednet Asia, a Manila-based consulting firm specializing in medical tourism. “You are going to see U.S. patients take a very, very defensive position,” he says

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.”