Would you get your hip replacement performed in India when you go to visit your
relatives?
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The Rise of Medical Tourism Q&A with: Tarun Khanna Published:
December 17, 2007 Author: Martha Lagace
Executive Summary: Medical tourismtraveling far and wide for health
care that is often better and certainly cheaper than at homeappeals to
patients with complaints ranging from heart ailments to knee pain. Why is India
leading in the globalization of medical services? Q&A with Harvard Business
School's Tarun Khanna. Key concepts include:
Medical tourism is a new term but not a new idea. Patients have long
traveled in search of better care. Today, constraints and long waiting lists at
home, as well as the ease of global travel, make medical tourism more
appealing.
Superior medical schools, a low cost of living, family preferences, and the
barriers to foreign accreditation mean that Indian doctors may prefer to work
in India rather than elsewhere.
The medical services industry is evolving quickly. Khanna expects to see
dynamics in China similar to those in India and in other parts of Southeast
Asia.
Tarun Khanna is the Jorge Paulo Lemann Professor of Business Administration
at Harvard Business School.
More Working Knowledge from Tarun Khanna
Tarun Khanna - Faculty Research Page
About Faculty in this Article:
Felix Oberholzer-Gee is the Andreas Andresen Associate Professor of Business
Administration at Harvard Business School.
What used to be rare is now commonplace: traveling abroad to receive
medical treatment, and to a developing country at that.
So-called medical tourism is on the rise for everything from cardiac care to
plastic surgery to hip and knee replacements. As a recent Harvard Business
School case study describes, the globalization of health care also provides a
fascinating angle on globalization generally and is of great interest to
corporate strategists.
"Apollo HospitalsFirst-World Health Care at Emerging-Market Prices" explores
how Dr. Prathap C. Reddy, a cardiologist, opened India's first for-profit
hospital in the southern city of Chennai in 1983. Today the Apollo Hospitals
Group manages more than 30 hospitals and treats patients from many different
countries, according to the case. Tarun Khanna, a Harvard Business School
professor specializing in global strategy, coauthored the case with professor
Felix Oberholzer-Gee and Carin-Isabel Knoop, executive director of the HBS
Global Research Group.
The medical services industry hasn't been global historically but is becoming
so now, says Khanna. There are several reasons that globalization can manifest
itself in this industry:
Patients with resources can easily go where care is provided. "Historically
doctors moved from Africa and India to London and New York to provide care. Now
we are basically flipping it around and saying, 'Why don't the patients move?
It's not as difficult as it used to be.' "
High quality care, state-of-the-art facilities, and skilled doctors are
available in many parts of the world, including in developing countries.
Auxiliary health-care providers such as nurses go where care is needed.
Filipino nurses provide an example, perhaps.
"From a strategic point of view you can move the output or the input,"
explains Khanna. "Applying this idea to human health care sounds a bit crude,
but the output is the patient, the input is the doctor. We used to move the
input around, and make doctors go to new locations outside their country of
origin. But in many instances it might be more efficient to move the patients
to where the doctors are as long as we are not compromising the health care of
the patients."
Khanna recently sat down with HBS Working Knowledge to discuss the
globalization of health care in the context of India and Apollo Hospitals.
Q: What led you to research and write this case?
A: I came across the company during some of my travels in South India. It was
so unusual to find "first-world health care at emerging-market prices" as the
case says. Often better careby which I mean technologically first-rate care
with far greater "customer service" and accessibilityis available in parts of
India than in my neighborhood in Boston.
Felix Oberholzer-Gee, Carin-Isabel Knoop, and I decided to write the case
just because health care is such a primal thingit arouses a lot of emotions
and insecurities. After all, it's one's life and health that one is dealing
with. And the prospect of entrusting health care to a developing country had a
pedagogical "shock value," too.
"A lot of entrusting medical care to different locations is about a
psychological fear of the unknown." For a long time I've been interested in
studying world-class companies in developing countries. For me and my colleague
Krishna Palepu, India has served as an intellectual laboratory. So I've always
been anecdotally aware of the possibility that people could benefit from
India's soft assets, so to speak. In this case that means skilled health-care
professionalsdoctors, nurses, technicians, etc. The fact that the cost of
living is so much lower in India means that the same service is possible at a
fraction of the price elsewhere. For most routine issues, as well as invasive
procedures that are routine, I see no reason why more people would not go to
India.
Q: The term "medical tourism" is fairly new, but how new is the phenomenon of
going overseas for medical treatment?
A: When I was a college student in the United States I discovered that dental
care was very expensive. Even back then, many of my international classmates
essentially engaged in medical tourismthey would simply bundle up the care
they needed, make a trip to their country of origin, and take care of it. India
was certainly one of those countries I was aware of due to my own personal
background.
We didn't have a term for medical tourism, but in a sense it was all around
us. It took a set of entrepreneurs to begin to make it happen. By the late
1990s, when I was teaching courses in global strategy, some of my Thai,
Malaysian, and Singaporean students were perfectly aware of the term, because
these countries of Southeast Asia already had very good tertiary-care hospitals.
Medical tourism usually refers to the idea of middle-class or wealthy
individuals going abroad in search of effective, low-cost treatment. But there
is another dimension of medical tourism that is not called medical tourism.
Narayana Hrudayalaya, a heart hospital in India [see article], treats indigent
people from neighboring countriesPakistan, Bangladesh, Burmawho suffer from
heart disease and can't afford surgery. Treatment for them is free. The
hospital is able to provide it because surgical methods are efficient enough
that pro bono care doesn't hurt the bottom line.
Q: Why is India gaining prominence for medical tourism?
A: India is encouragingly less "scary" now. I think a lot of entrusting
medical care to different locations is about a psychological fear of the
unknown. An important strategic challenge for developing-country hospitals is
to reduce the psychological fear.
In addition, India is rising because there's just a ton of very well-trained
doctors just like there is a ton of well-trained engineers. Over the decades,
many engineers have relocated to Silicon Valley, but for doctors it remains the
case that barriers to entering the U.S. medical profession are still large.
In India, the same depth of pool of engineering and mathematical talent for
software, offshoring, and outsourcing is there for medicine, too. In the 1950s
and '60s, the Indian government invested a lot in tertiary education. By now
there is at least a small handful of medical institutes that are really
first-rate, and the doctors they produce are extremely well trained.
When my colleagues and I began to research this case, some other countries
had already stolen a march on IndiaSingapore, and Malaysia in particular, and
areas of the Middle Eastyet there was still a lot of room for growth. India
has had a unique competitive advantage as a result of this deeper pool of
technical knowledge and the fact that it is simply a large country and has more
people.
I would expect to see dynamics in China similar to what is happening in other
parts of Southeast Asia. China frequently makes the news for stem cell
therapies that are not allowed in the West. So while I think India has some
unique features it is not strictly unique.
Q: What are the recruiting challenges for staffing these hospitals with
doctors?
A: In the case, Dr. Prathap C. Reddy, the founder and chairman of Apollo
Hospitals, says he spent a lot of time studying specialists almost like an
executive search firm would, to identify their pleasure points and pain points
in terms of building a successful practice in the West and potentially in
India. He wanted to understand not just medical training and specialties but
also family circumstances, since it is always a family decision to relocate.
In the past, Indian doctors left India so they could multiply their incomes.
But now we're seeing the reversal of that. India is booming so why leave, and
by the way, patients can go there.
As the case describes, accreditation is a pretty huge barrier for doctors
going abroad. Just as Dr. Reddy had to spend time convincing the Indian
government that the idea of medical tourism was a good use of national
resources, when we wrote the case he was in the process of convincing various
countries that similar development made sense. So it's a tricky public policy
issue.
Q: How does growth in private hospitals affect public health care in India?
A: There is an assumption in the view often expressed in the media in India
and Europe, for instance, that when private hospitals in India provide care to
heart patients from England, the hospitals are somehow taking care away from
poor people in India. The assumption seems to be that if medical tourism was
banned, the doctors in question who were catering to wealthy patients would
suddenly, as a practical matter, move to a village. It takes a different set of
individuals, a different set of infrastructure circumstances to create that
scenario. We need good scholarship to verify the idea that there is a potential
substitution between caring for sick people from England and providing
medication for malaria in an Indian village. I'm not aware of such analysis yet.
My guess is that the bulk of India's problem is primary health, and has
nothing to do with tertiary care. And the primary health problem is not going
to be addressed by a private hospital for the most part anyway. These are
almost different industries. If someone analyzes the landscape and discovers
that there is substitution between care, then there is a real public policy
issue that needs to be debated.
Q: How are marketing strategies evolving?
A: My observations are that medical tourism is promoted much more heavily in
the United Kingdom than in the United States. Public interest in Britain is in
the context of the National Health Service and its constraints. Initially the
rules required that patients be treated only in the United Kingdom. I believe
there has been a gradual relaxation in these rules, so that some care can be
provided within some EU countries. I know that various Indian hospitals are
continually attempting to get accredited to perform certain procedures.
What is striking is that in London medical tourism makes the front page of
newspapers. People ranging from generals in the British Army to politicians to
blue-collar workers are quoted, all saying, in effect, "I had a great time, and
now I'm well." The most common treatments seem to be for cardiovascular issues,
bone-related issues such as hip replacements, and general age-related issues.
Most of these articles depict people going to India, but they almost never
profile an Indian going to India. They profile a wide spectrum of citizens, not
just British citizens of Indian or Asian origin.
Q: For-profit hospitals around the world have been associating with
well-regarded U.S. medical schools and clinics. How can Apollo Hospitals
differentiate itself from growing competition?
A: What is happening now is the normal evolution of an industry, and these
hospital companies are all trying to figure out what their angle will be.
I certainly don't think affiliating with a medical school or clinic in the
West is a panacea. We will see solutions emerge that have nothing to do with
the West and that specialize in particular kinds of care where the West may not
even have much competence: tropical diseases in Southeast Asia and Africa, for
instance. On the other hand, you might see very interesting links between
particular companies, research institutes, and hospitals in different parts of
the worldin the Middle East, Europe, the United States. My guess is that 3 or
4 prominent hospital companies will survive because the demand is so huge.
At the end of the day we all ought to celebrate the development of these
hospitals, because a lot of people who would have to wait in pain for 8 months
for a hip replacement can get it tomorrow, at much lower expense. People with
excruciating dental pain can get it fixed, cost effectively, much quicker. And
patients who need a kidney transplant and have to be on dialysis can get
attention sooner. As always there are challenges, but from humanity's
standpoint we ought to celebrate.
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