509-074-1

Medical Tourism:
Rise of Asia as Global Healthcare Destination
Asia is a preferred health care destination and is set to grow further, fuelled by the relatively low-priced
healthcare services available.1
Birch Don, President and CEO, Abacus International
Medical tourism is a small but growing trend among American patients, and its unclear at this time whether
the risks outweigh the benefits.2
Rohack J. James, Board Member American Medical Association

Medical tourism refers to a service extended to the people who travel to foreign countries that provide treatment at
comparatively lower costs than their own country. Expensive treatment costs, lack of accessibility to health facilities
and long waiting periods are some factors that are encouraging patients from developed countries to visit developing
nations for their medical and relaxation needs. Despite of soaring healthcare expenditures, developed countries like
UK and US are struggling to improve their healthcare systems. In compliance with the changing trend, Asian countries
like India, Singapore and Thailand have emerged as global health destinations attracting a large number of medical
tourists. As such medical tourism has been experiencing rapid expansion in the region, as per the estimates, the Asian
medical tourism industry will be worth $4.4 billion by 2012.3 Asian countries are making significant investments to tap
the immense potential and aim to become global health destinations. Several Asian governments are encouraging
the nascent market of medical tourism through forging partnerships among hospitality providers, travel groups and
medical associations. By working closely, these independent industries could offer value-added packages in the relatively
new global business of medical tourism.

Emergence of Medical Tourism

Healthcare has always been a major concern for people. Treatment costs, quality of the treatment, accessibility
and convenience of the system are crucial factors for a good healthcare system. Despite having a great medical
infrastructure healthcare system, the US, UK and other developed countries failed to satisfy their citizens healthcare
concerns. This in turn led to rise of medical tourism. Medical tourism is witnessing rapid progress by focussing mainly
on affordability and the quality of treatment. Asia has become a global healthcare destination offering world-class
services with affordable prices compared to developed countries (Exhibit I).
1
2
3

Medical Tourism, Asias growth industry, http://www.hotelmarketing.com/index.php/content/article/060410_medical_tourism_asias_growth_industry/, April 10th 2006

AMA provides first ever guidance on Medical Tourism, http://www.ama-assn.org/ama/pub/category/18678.html, June 16th 2008
Siddiqi Raquib, Asias US$4 b Medical Tourism market, http://nation.ittefaq.com/artman/publish/article_28152.shtml, May 27th 2006

This case study was written by Thalluri Prashanth Vidya Sagar, under the direction of Saradhi Kumar Gonela, IBSCDC. It is intended to
be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The
case was compiled from published sources.
2009, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without
the permission of the copyright owner.

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509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit I
Global Medical Tourism Hubs

Source: Medical Tourism: Consumers in search of value, http://www.deloitte.com/dtt/cda/doc/content/us_chs_MedicalTourismStudy(1).pdf

Tarun Khanna, professor, Harvard Business School opines that people of the developed countries like US, UK and
Japan have high expectations regarding healthcare; whereas governments are unable to meet these demands and
thus are promoting medical tourism.4 Deloitte Consulting reported that 150,000 medical tourists from US visited various
countries in 2006 and 750,000 in 2007 for their healthcare needs. It further forecasted that the number of medical
tourists would increase to about a million and half medical tourists in 2008 and that medical tourism would experience
a 10-fold growth in the next decade5 (Exhibit II).

4
5

Martha Lagace, The Rise of Medical Tourism, http://hbswk.hbs.edu/item/5814.html, December 17th 2007
Johnson Linda A., Americans Look Abroad to Save on Healthcare, http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/03/BUGA121GPF.DTL&type=health, August 3rd
2008

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit II
US Travellers Seeking Medical Treatment Abroad
18
16

15.8

2016

2017

13.6

14

12.4

10.8

12
9.38

10
7.5

6
3

4
2

15

0.75

1.5

0
2007

2008

2009

2010

2011

2012

2013

2014

2015

US Healthcare Travellers (in million)

Source: Medical Tourism: Consumers in search of value, http://www.deloitte.com/dtt/cda/doc/content/us_chs_MedicalTourismStudy(1).pdf, 2008

Dr. James Rohack, American Medical Association (AMA) Board Member, attributed the growth of medical tourism
to the failure of US healthcare system in providing affordable and quality treatment for its people. To create awareness
regarding treatment procedures abroad, AMA conducted its first ever guidance programme on medical tourism in
2008. The complexities in healthcare system like selection of a surgeon, limitations in treatment procedures and
treatment costs have been making people to travel outside their country for treatment. Moreover, the havoc of US
healthcare system contributed for medical tourism in Asian countries.

An Overview of the US Healthcare System

US is the only industrialised nation without universal healthcare system. US healthcare system suffers from lack of
standardised procedures. As hundreds of insurance companies provide healthcare insurance in different parts of the
country, it is resulting in creating chaos in the healthcare system. Majorly, insurance policies differ from company to
company, disease to disease and treatment procedures, creating much discomfort and inconvenience to the patients.
Private insurers form the largest healthcare spenders in the country with 36%, followed by 15% by private out of
pocket, 34% by federal government, 11% by state and local governments and remaining 4% by private funds.6
Healthcare cost in US in 2007 was around $2.26 trillion, which formed 15.2% of GDP and is estimated to grow to
$4.14 trillion in 2016.7 Per capita spend on healthcare in 2007 was $7,4398 (Exhibit III), elbowing out many in lower
income bracket of the healthcare system. US government programmes Medicaid and Medicare accounted for over
45% of healthcare expenditures. In 2007, 84.7% of citizens had health insurance in which 59.3% was contributed by
employers, 8.9% by individuals and remaining 27.8% was covered by government programmes.9

6
7
8
9

Health, United States, 2007, http://www.cdc.gov/nchs/data/hus/hus07.pdf, November 2007

Solving the healthcare systems conundrum, http://www-03.ibm.com/innovation/us/pdfs/Solving_the_healthcare_conundrum.pdf, December 2007
National Health Expenditure Projections 20072017, http://www.cms.hhs.gov/NationalHealthExpendData/Downloads/proj2007.pdf
Income, Poverty and Health Insurance Coverage in the United States: 2007, http://www.census.gov/prod/2008pubs/p60-235.pdf, August 2008

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit III
Per Capita Expenditure on Healthcare 19602007
8000

7,439

7000
5,485

6000
5000
4000

3,910

1994

1996

4,257

4,729

2000

2001

5,879

2,813

3000
1,100

2000
1000

3,604

5,079

6,280

148

356

0
1960

1970

1980

1990

1998

2002

2003

2004

2007

Per Capita Expenditure in $

Source: National Health Expenditure Data, http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp

US healthcare system is in severe crisis for reasons such as mounting health costs, rising premium costs, absence
of insurance coverage to 45.7 million people (15.3% of the US population),10 alarming number of people suffering from
obesity, cardiac problems, cancer, mental imbalance and diabetes, absence of standard procedures and high
administrative costs, and the onset of baby boom generation into Medicare policy. One of the major problems is aging
baby boom population, who comes under Medicare from 37.8 million in 2007 to 40.2 million in 2010 to 54.6 million in
2020.11 The absence of public safety net to cover health costs, the US populace has set in a search for the regions that
can provide quality medical services at lower costs than US health system. And the citizens of US realised medical
tourism to Asia as a viable option.

Medical Tourism in Asia

Asian countries having expertise medical fraternity trained in UK and US are at the forefront of medical tourism.
They are fast emerging as global healthcare destinations by offering quality treatment at affordable costs. Apart from
the western treatment procedures, Asian countries (Exhibit IV) have rich medical heritage offering alternative health
services like yoga, acupuncture and herbal treatments to attract medical tourists.
Don Birch, president and CEO, Abacus International, points out that Asia has become a preferred healthcare
destination by offering affordable treatment to medical tourists. Comparing the cost of treatment in Asia and US, he
emphasises on the competitive advantage of the Asian countries (Exhibit V). Naresh Trehan, former executive director,
Escorts Heart Institute and Research Centre, says that Asian countries, especially India, have gained world-class
expertise in specialised practices such as cardiac care offering better care at affordable price compared to world-class
institutes in developed countries. He states that the death rate of coronary bypass patients in Escorts is 0.8% compared
to 2.35% in Presbyterian Hospital, New York.12 Affordable treatment costs and world-class expertise medical fraternity
coupled with holiday trips with tailor-made packages have made Asia a preferred destination for medical tourists from
developed countries. Among Asia, Singapore, Thailand, India, Malaysia and Philippines (STIMP countries) have become
preferred destinations for the medical tourists from US and other developed countries.

10

11
12

Gerencher Kristen, Behind the new health insurance numbers, http://www.marketwatch.com/news/story/45-million-lacking-coverage-pressure/story.aspx?guid=%7B7B6EFE9E60B7-43EC-A158-DB8D8A6C8466%7D, August 28th 2008
Older Americans, 2008: Key Indicators of Well-Being, http://www.agingstats.gov/agingstatsdotnet/Main_Site/Data/2008_Documents/OA_2008.pdf, 2008
Lancaster John, India: Hot spot for medical tourists, http://www.indianexpress.com/oldstory.php?storyid=57509, October 23rd 2004

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit IV
STIMP Countries*: Asian Top Medical Tourism Destinations
Medical Tourism
Crossing the boundaries of ones
nation to seek almost equally
qualitative and economic healthcare
abroad. It may be either immediate
trav el for el ectiv e su rgic al
procedures or a planned visit during
vocations.

Winner of Danish Travel Award for

second consecutive time for its
performance as the Best Tourist Country
in 2007.
Thai Airways International, the national
carrier, ranked second in the Best
International Airlines award category
14.8 million tourists visited Thailand in
2007.
Medical procedures available at a cost
20% 40% of US
Home for four JCI accredited hospitals

Attractions for Asian Medical

Tourism
Maintaining constant growth rate

Malaysia

Thailand

of 7% since 2000, Asia-Pacific

region received 185 million
tourists in 2007, according to
UNWTO.
Asian competitive cost advantage
with nearly one-third of US and
o the r E u ro p e an na t i on s
healthcare costs and of other
developing countries in the West.
Equally qualitative patient-centric
coordinated care.
No question of waiting lists
Availability of procedures like
cosmetic and dental surgery that
are not covered under insurance
plans.
Rising number of internally
accredited hospitals in Asia.

In five years, the number of

foreigners
seeking healthcare services in Malaysia has
almost tripled from 75,210 patients in 2001
to 296, 687 patients in 2006.
Association of Private Hospitals Malaysia
(APHM) predicts a growth in this trend at a
rate of 30% per annum until 2010.
Thirty five private hospitals in the country
have been identified to promote Malaysia as
a health tourist destination
Estimated to earn $590 within next five
years
Procedures include alternative medicine
available at a cost 25% of US
One JCI accredited hospital

Philippines
Medical tourism generated $200 million
in 2005 alone.

Philippine Medical Tourism Programme

aims to attract 700,000 foreign patients

generating an income of $2 billion per
annum by 2010.
Medical procedures available at a cost
30% 50% of US.
Has two JCI accredited hospitals.
Unique Filipino brand of caring and
compassion.
Specialized in cosmetic surgery
performed by the doctors trained in
plastic and reconstructive surgery .

Global Scenario

Singapore

UNWTO reports: International

tourism arrivals in 2007 has

reached 898 million, an increase
of 6% as compared to 2006.
Americans travelling abroad for
healthcare is 750,000 in 2007,
approximately 33% of global
medical tourists. It is expected to
reach 15.75 million by 2017.
U K c ontri butes highes t
percentage of medical travellers
to East European countries.
Deloitte estimates a lose of $162
billion in US healthcare industry
by 2012.
Medical travel blesses the
developing countries with $21
billion per annum in the next four
years.

India

Ranked as the best healthcare system in

150, 000 medical tourists visited in 2004.

Number of medical tourists is expected

Medical procedures available at a cost

to grow by 15% , making Indian medical

tourism to become a $2.3 billion industry
by 2012.
By 2004, more than 38,000 Indian
physicians have filled the American
healthcare system, accounting for one in
every 20 practicing doctors in America.
By 2012, revenues are estimated to
touch $2.2 billion.
Medical procedures available at 20% of
US.
Has 10 JCI accredited hospitals.

* Singapore, Thailand, India, Malaysia and Philippines

Compiled by the author

2001.
40% 50% of US.

370, 000 medical tourists in 2007 seeking

one or the other medical procedure.

Plans to boost the number of medical

tourists to one million by 2012.

Estimated to earn above $1.6 billion per

annum.

Houses 11 JCI accredited and ISO-90012000 certified hospitals.

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit V
Comparison of Treatment Costs ($)
US

India

Thailand Singapore

Malaysia

Typical Medicare
Payment

Coronary Artery Bypass

Surgery

70,000133,000

7,000

22,000

16,300

12,000

18,60923,589

Bypass Surgery with

Heart Valve Replacement

75,000140,000

9,500

25,000

22,000

13,400

30,90342,954

Hip Replacement

33,00057,000

10,200

12,700

12,000

7,500

10,08512,263

Knee Replacement

30,00053,000

9,200

11,500

9,600

12,000

10,08512,263

Prostate Surgery
(TURP Procedure)

10,00016,000

3,600

4,400

5,300

4,600

3,0033,703

Gastric Bypass

35,00052,000

9,300

13,000

16,500

12,700

7,9029,876

Facelift

10,50016,000

4,800

5,000

7,500

6,400

NA

Angioplasty

57,000

11,000

13,000

13,000

11,000

NA

Hysterectomy

20,000

3,000

4,500

6,000

3,000

NA

Spinal Fusion

62,000

5,500

7,000

9,000

6,000

NA

Source: Hospital Charges Here and Elsewhere, http://health.usnews.com/articles/health/special-reports/2008/05/01/hospital-chargeshere-and-elsewhere.html, May 1st 2008

An industry analyst reported that 1.32 million medical tourists visited Asia in 2007, spending around $1.3 billion.
The expenditure is expected to reach $4.4 billion in 201213 with 9 million tourists by then growing at a CAGR of 19%.
Out of STIMP countries, Singapore, Thailand, Malaysia and Philippines have been concentrating on the healthcare
such as spas and messages, where as India on the other hand is concentrating on the high-end healthcare such as
cardiac, coronary artery and bypass surgeries, heart valve replacement, etc. (Exhibit VI).
Singapore is growing at a fast pace among STIMP countries in promoting medical tourism. WHO has ranked
Singapore as first in Asia and sixth in the world in overall health system performance, which made Singapore an
important destination for medical tourism that is expected to generate $3 billion by 2012. Well known for its complex
neurosurgical procedures, Singapore has offered affordable treatment to 370,000 tourists in 2007 and the number is
expected to reach 1,000,000 by 2012.
Thailand is a forefront runner in medical tourism in Asia and a leader among STIMP counrties in providing
high-end medical services. It earned $615 million in 2005 attracting 1.28 million tourists. The government along with
travel agencies and hospitality groups has targeted at earning revenue of $2.23 billion by 2010 and attracting 2 million
tourists. Thailand is known for its Spas, offering treatments in areas like plastic surgery, dental surgery, facelift and
other advanced treatments.

13

Medical Tourism, Asias growth industry, op.cit.

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

Exhibit VI
Share of Spas in Medical Tourism
Revenues

Growth in
Revenues

Singapore

Thailand

India

8.85 million
in 2006

8.3 billion
Thai Baht or
$263 million
(An increase of
over 200%
since 2002)

$35 billion in next

34 years
(ASSOCHAM on
March 19th 2008)

11% over next

2 years
after 2007

Malaysia

Philippines
Each medical tourist
spends $3,500 on an
average during one stay
Medical tourism got
revenues of $350 million
since 2006, when the
programme was launched
by government.

$2 billion by 2012

Number of
Travellers

3,649,000 visitors 1,70,000 a year

in 2007

Growth Rate 63% since 2003

in number
of Spas

154% since 2002

Number of 173 (58% & 14%) 585 (51% & 49%)

Spas
(Standalone
& Hotel and
Resort Spas)

200% since
2002

74% since 2003

151 + 25
87 (76% & 20%)
under the
development
(54% & 40%)

Compiled by the author

India that emerged as a hot destination for cardiac, hip resurfacing, dental and advanced medicinal procedures
attracted 150,000 tourists and earned $310 million in 2005. Analysts reported that India is becoming a dominant force
in Asia in medical tourism and would attract 1 million tourists by 2010 and the revenue is likely to reach $2.2 billion by
2012, which forms 50% of Asias total earnings. With more number of US- and UK-trained doctors filling in a number
of world-class medical facilities spread across its territory, India is fast emerging as a global healthcare hub not only
among STIMP countries, but also in Asia to provide high-end healthcare and improved treatments for coronary heart
disease, bypass surgery, etc., and emergency treatment services for life-threatening diseases.
Malaysia, a late entrant in medical tourism among STIMP countries, attracted 296,687 tourists in 2006 from
75,210 in 2001. Taking clues from neighbouring Thailand, Malaysia aims at comprehensive development in medical
tourism and targeted revenue of $578 million by 2010. Philippines, also a late entrant in medical tourism, attracted
tourists from Japan, China and South Korea and earned revenue of $200 million in 2005, which is expected to reach
$2 billion by 2010. Philippines, which set up a separate ministry for promotion of medical tourism, aims to attract
700,000 tourists by 2010.
Along with Malaysia and Singapore, Philippines is also venturing into the field of medical tourism to take its own
share out of the benefits reaped by the STIMP countries. The country is fast emerging as a medical tourism destination
by promoting various services for holistic wellness with the use of already established medical spas. However, Philippines
has only one JCI-accredited medical facility, St. Lukes hospital. Singapores Department of Health also conferred the
Gintong Sigla or Golden Enthusiasm Seal of Approval on this health centre. A full-fledged medical tourism promotion
7

509-074-1

Medical Tourism: Rise of Asia as Global Healthcare Destination

programme, Philippines Medical Tourism Programme is also launched by the Singapore government and St. Lukes
hospital is the only partner in this governmental move.
Different from the rest of the world, the Asian countries, especially STIMP countries possess traditional healing
techniques, which are very attractive to westerners. The STIMP countries are also blessed with picturesque spots that
make prospects of tourism bright. Added to the blessings of the nature, the low-cost of living as well as foreign trained
and highly experienced medical personnel make the STIMP countries a perfect destination for medical tourists.
Governments of the STIMP countries are attempting to unite the coordinated efforts of their respective tourism
departments, healthcare facilities, specialists, hotel groups, tourist agencies, health insurers and wellness centres to
attract western populace.
Apart from others in the healthcare value chain, the key players like medical centres and healthcare providers
derive their profits in two ways. One is directly from the medical treatment provided to the foreign patients and the
other way is to derive revenues from the services other than the treatment, such as the accommodation charges.
Asia Healthcare 2008 Regional Conference emphasised the need for better coordination among travel agents,
hospitality groups and governmental agencies to provide value-added packages to the western travellers.
Governments across Asian countries like India, Singapore and Thailand initiated public-private partnerships to
offer value-added packages to attract tourists from US, UK and other developed countries. With a vast potential,
the healthcare tourism among the STIMP countries is expected to offer promising prospects for all the players in
the value chain in the next three decades.