Rajkamal Rao

Medical tourism can be the next big export earner

Rajkamal Rao | Updated on April 27, 2018 Published on April 27, 2018

By innovating like Nasscom did, India’s health services sector will be able to tap lucrative markets like the US

Last month the Association of American Medical Colleges issued a sobering report: The US could see a shortage of up to 120,000 physicians by 2030. While the reasons are largely demographic — the over-65 age group is expected to increase by 50 per cent by then — America is also a victim of its own policy choices.

The American healthcare industry is gigantic, so vast, that at an annual spend of $3.5 trillion, it is one-and-a-half times larger than India’s GDP. Healthcare spending is further expected to grow at 5.3 per cent in 2018. Such high growth rates are unsustainable in the long run. Because of doctor shortages, an explosion in the number of sick people and illegal immigrants demanding care, waits to see a doctor are long, almost as bad as in Canada or in the UK. Most consumers are simply frustrated with America’s healthcare system. If India Inc can innovate just like Nasscom did in the 1990s, India’s health services sector can grab a portion of the American market by offering world class medical tourism services to American patients. Even a 5 per cent slice can result in a $175 billion export industry, much larger than our IT services sector today.

American healthcare policy debacles have been many and create a perfect opportunity for Indian companies to exploit. Consider Obamacare. By imposing on insurance companies to offer mandatory benefits such as maternity care and mental health services to everyone — and removing price differentials for those with pre-existing medical conditions — the government sent the private health insurance market into a tailspin. Double digit premium increases are now an annual occurrence. Deductibles and co-payments are unreasonably high. There just aren’t enough healthy people in the system, so the insurance market is already in the dreaded “death spiral” as more big insurance companies simply withdraw from the Obamacare marketplace.

Americans would warmly respond to visiting India to get treated for non-life threatening ailments — such as knee and hip replacement surgery — and life-saving preventive care, such as stents and balloon angioplasty. Americans already have the highest regard for Indian doctors who have earned a reputation for outstanding clinical skills and bedside manners. The big issues are that America perceives India’s hospital infrastructure and service quality levels to be poor — and these are legitimate concerns.

But we’ve been here before. In the mid-1990s, most Americans never thought we had the internet bandwidth, the reliability of electrical power, workplace comfort for IT staff and building security in our development centres to offer global technology services. Today, Nasscom companies in India operate world-class centres which have become the world’s envy.

To be sure, India does have a thriving medical tourism industry catering largely to private-pay patients from Asia but the few players who offer this service are all fragmented. For India to become truly successful though, the hospital sector should borrow from Nasscom’s playbook to invest, train and scale both in quantity and quality.

Just like the IT industry offers technology parks with five-star hotels within them to cater to visiting foreign business people, the medical tourism sector has to build world-class hospitals, staffed and dedicated to foreign patients.

Customer acquisition should start in the US. The industry should establish primary care clinics in America to refer patients to India, for free. It should offer a one-stop service, soup to nuts — travel, accommodation, cashless direct billing, 24x7 customer service and post-hospital care — all coordinated through a single portal or call centre. Arriving patients should be met at the airport by a full-time adviser who stays with the patient until departure, much like a conducted tour manager. Top quality health care requires abundant (perhaps even redundant) labour and India offers a competitive advantage here. And India has the advantage of being able to recruit English-speaking workers for the entire experience. Post-surgical rehabilitation could include camps at yoga, meditation and balanced-diet clinics, already respected as Indian exports in many parts of the US. Nasscom companies could provide the industry with the required technology and business transformation expertise to make the whole process work like a well-oiled machine.The cost arbitrage factor, however, is the real selling point for America’s insurance companies. Total knee replacement in the US retails for about $50,000, compared to about $3,000 in India. Outsourcing medical care may be the only way for America to control runaway health sector costs.

India is already a powerhouse in the production and distribution of the world’s generic drugs such as for controlling hypertension, diabetes and heart disease. Expanding the medical tourism industry is a natural byproduct of our pharma industry’s success. But doing so should become a concerted public-private partnership where careful planning and world-class execution are vital.

The opportunity is huge. We just need someone to bell the cat.

The writer is the managing director of Rao Advisors LLC, Texas

Published on April 27, 2018

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