As readers of this blog know, I’ve posted a number of pieces on medical tourism — the phenomena of patients going abroad for health care treatment. My interest in this activity comes from looking at the health care industry as an engine for economic development. On the one hand, localities believe their health care sector is geographically rooted – it serves the local economy. After all, everyone needs a doctor eventually. On the other hand, some high end health care facilities have always drawn in outside patients (i.e. Mayo Clinic) which are a form of services exports. Medical tourism shows that the trade flow in health care services runs both ways. Patients continue to come to high end U.S. facilities. And U.S. patients seek lower cost services abroad.
But, as a recent Economist article (Médecine avec frontières: Why health care has failed to globalise), the level of trade has not lived up to expectations. And, it may not be the patients who are necessarily moving:
the mere possibility of medical tourism is starting to change health care in unexpected ways. The biggest gains have gone not to patients, insurers or governments, but to hospitals, which have calculated that they could win more business by reversing the trend and going abroad to find patients. America’s Cleveland Clinic will open a branch in Abu Dhabi next year. (It already manages Sheikh Khalifa Medical City, a 750-bed hospital in Abu Dhabi.) Singapore’s Parkway Health has set up hospitals across Asia. India’s Apollo Hospitals, a chain of private hospitals, has a branch in Mauritius.
And though American firms and insurers have mostly stopped scouring the globe for bargains, some have negotiated bulk rates with top-notch hospitals at home. Lowes, a home-improvement firm, offers workers all around the country in need of cardiac care the option of going to the Cleveland Clinic in Ohio. PepsiCo, a food giant, made a deal with Johns Hopkins in Maryland. Other firms are said to be working on similar schemes. The future of medical tourism may be domestic rather than long-haul.
In other words, the trade flows may be changing from health care imports (U.S. patients going abroad) to exports (U.S. hospital selling services to foreign patients in their home or third party countries). It is also the case of that dynamic economic force of import substitution as more U.S. patients opt for the local rather than the foreign product.