Role of Health Tourism in Global Health Service Crisis

1. Role of Health Tourism in Global Health Service Crisis Anil K MainiPresident – Corporate DevelopmentApollo Hospitals Group

2. Global Medical Tourism Market • Important source of revenue in developing nations • Revenues exceeded US$ 20 Billion in 2004 • Revenues expected to grow to US$ 100 Billionby 2012 • Indian medical tourism growing at 15% annually Source: Medical Tourism: Global Competition in Health Care by Devon M. Herrick, November 2007, National Center for Policy Analysis.

3. Strong Drivers for Medical Travel • Aging overseas population. • High cost of healthcare in developed countries. • Long waiting periods for tertiary care. • Large un-insured & under insured healthcare market. • Lack of tertiary care facilities in developing and under-developed countries.

4. Medical Tourism Patients Recent McKinsey study identified the major reasons patients travel abroad for medical care • 40 percentfrom less developed nations seek advanced, high quality care • 32 percentfrom developed nations seek higher quality care from advanced hospitals in developing nations • 15 percent from countries with socialized medicine who seek faster access and no waiting lists • 13 percentfrom developed nationsseek healthcare at lower costs than available at home • Primarily from the U.S. Fastest Growth Potential is in the Market Segment Seeking Lower Costs Source: Mapping the Market for Medical Travel by Tilman Ehrbeck, Ceani Guevara and Paul Mango, May 2008, McKinsey Quarterly.

5. Three key blocks of providers of medical tourism Americas, EMEA and S/SE Asia Americas Europe / Middle East/ Africa (EMEA) South / South East Asia Americas Europe / Middle East/ Africa (EMEA) South / South East Asia UK Canada UK Czech Rep. Hungary Canada US Japan Czech Rep. Hungary Antigua2 Mexico US Japan Costa Rica Philippines Antigua2 Mexico India Barbados2 Thailand U.A.E Brazil Costa Rica Malaysia Singapore Philippines India Barbados2 Thailand U.A.E Brazil Australia Malaysia Singapore S. Africa Australia S. Africa Source of medical tourists for South / SE Asia1 Providers of treatment

6. India & Apollo: An Emerging Healthcare Hub in South-Asia

7. The Apollo Story • The Apollo Hospitals Group was started by Dr. Prathap C. Reddy in 1979 • The Group started its first hospital in Chennai in 1983 with a initial bed strength of 150 • Over the past 25 years the bed strength today stands at over 10,000 • With over 44 managed and owned hospitals, Apollo is Asia’s largest healthcare network

8. Apollo Group - Medical Achievements Touched over 12 million lives6,40,000 Preventive Health ChecksTreated over 75,000 Foreign Patients from 75 countriesDone over 100,000 cardio thoracic surgeries Done 10,000 Kidney Transplants, 350 Bone Marrow TransplantsFirst successful liver transplant in India, at Apollo DelhiPioneered interventions and surgical proceduresApollo Delhi first hospital to be accredited by JCI, in India

9. Our Objective • To create a long term “win–win” Healthcare Delivery Strategy for overseas Patients and Payers. • To provide premier value-added services that allow overseas patients to effectively leverage, emerging cost effective global medical treatment alternatives.

10. Medical & Health Travel Medical Travel • Focused on treatment of acute illnesses, elective surgeries like Cardiology, Cancer, Orthopedics etc. Health Travel • Focused on Wellness, Rejuvenation, Preventive Health, Image Health, combined with Traditional Medicine like Ayurveda, Yoga etc.

11. Is There a Drop in Medical Travel?

12. Yes For Health Travel for cosmetic & dental surgery, wellness etc. No For Medical Travel for high end Tertiary Care & Quaternary Care (For Life Threatening Diseases)

13. Patient/Market Profile for Medical Travel • Countries not having adequate healthcare services (SAARC, Middle East, Gulf, CIS and Africa). • Un-insured and under insured overseas patients mainly from USA. Large number of US Insurance majors & Corporates looking at cheaper healthcare options, overseas. • Waitlisted patients in UK and Canada. • Patients seeking procedures not covered by Insurance e.g. Dental, Cosmetology, Bariatric etc.

14. Our Proposition • Clinical outcomes on par with the World’s best Centers • Internationally qualified & experienced Specialists • Technology Edge – 3rd Generation equipment & infrastructure • Competitive costs – 1/10th of costs in the West • Quality of service: • No waiting time • JCI Accreditation • Patient centric care • Choice of location for patients in India, among Apollo locations • Medications are also much cheaper, often 50% of that in the US • English speaking staff & Doctors

15. Key Evaluation Criteria • Hospital reputation • Doctors training & reputation • Cost • Post-operative care • Proximity • Convenience • Visa availability • Cultural similarities • Family and friends' recommendation

16. Main Super-Specialties Sought • Cardiology • Joint Replacements • Cosmetic Surgery& Dental • Spine Surgery • Bariatric Surgery (Gastric Banding) • Cancer • IVF • Kidney & Liver Transplants • Bone Marrow Transplant

17. Auxiliary Services Services to the patients start from the moment they contact the Hospital till the time they land in India and leave back for their home country. Some of these auxiliary services include: Airport pick-up & drop Visa/Sightseeing arrangements Translators Coordinating appointments Accommodation for companions Locker facilities Cuisine

18. Cutting Edge Technology 320 Slice CT Scan 3.0 Tesla MRI PET CT CyberKnife

19. Role of Telemedicine Apollo is a pioneer in the field of Telemedicine and is credited with being the first to set up a Rural Telemedicine Centre in 1999. Now, Apollo has established this concept in overseas markets like Kathmandu, Lahore, Khartoum, Lagos, Aden, Colombo & Dhaka. Soon, Telemedicine will be a very important cog in the Medical Tourism wheel & all Providers and Facilitators will need to use it effectively.

20. Cost Advantage PROCEDURE COSTS IN INDIA & US COST (US$) PROCEDURE US INDIA Heart Surgery Bone Marrow Transplant Liver Transplant Joint Replacements Cosmetic Surgery 9,000 30,000 60,000 8,000 5,000 100,000 300,000 350,000 60,000 50,000

21. Accreditation – A Must Apollo Hospitals, New Delhi First Hospital in India to be Accredited by JCI Apollo Chennai, Hyderabad, Bangalore, Ludhiana & Dhaka are also JCI Accredited

22. A Good Base To Build On The next leap will come from geographical growth internationally, backed by sound brand and product strategy We Must Differentiate to Seek Greater Market Share

23. Turkey’s USP • Europeans’ wallets have shrunk as a result of the global economic crisis, pushing them to seek ways to lower their medical costs. • That search has put Turkey on the map as a popular destination for those wanting lower-cost healthcare. • One thing that also plays to Turkey’s favour is its high standards in medical care, as no less than 24 Hospitals and Clinics have JCI status, more than in almost every EU country. • In 2007, the number of foreign patients in Turkey was 150,000. Last year, the number of foreigners treated in Turkey increased by 40% to 200,000. • Turkey mostly receives patients from the Netherlands, UK, Belgium & France. There has also been an increase in Middle Eastern patients who have begun to prefer Turkey to Europe. Currently Turkey’s medical tourism market is worth around US$500 million, and it has the potential for many times that.

24. U.S. Market

25. U.S. – A Worsening Problem • The US Census Bureau estimates that by 2020, the population of seniors, currently 13 percent of the total US population, will grow to 17 percent. This graying of America will propel the demand for healthcare products. • For people with good insurance or other financial resources, the US offers the best care in the world. But, for the 47 million Americans who lack insurance or the ability to pay, world-class care is a distant dream. • Patients with chronic illnesses represent the highest cost and fastest growing group in healthcare. The US healthcare system is not structured to manage them. Thus, a large number of Americans no longer have access to healthcare or are at grave financial risk if they get sick. • Little likelihood that these problems will be remedied for decades.

26. Broadening the U.S. Market Reach • 300M US population consists of: • 47M uninsured • 8M with >$75K income & 35-64 age range • 250M insured (of which roughly 40M are underinsured) • 150M employer provided benefits • 70M covered by self-insured companies • 80M covered by private insurance • 20M direct purchase of private insurance • 80M government provided program Current retail target market is less than 3% Adding self-insured employers expands US market opportunity ten-fold

27. Growing U.S. Medical Tourism Market • Estimated Medical Tourism 150,000 patients from U.S. in 2005 • Most traveling to Latin America and Mexico • Estimated Growth • Possible increase to 500,000-700,000 patients per year • US$33 Billion in potential cost savings • Option increasingly available through employers and medical insurance carriers U.S. Market Will Increase Dramatically if Insurance Companies Cover the Cost of Healthcare Sources: Patients Beyond Borders: Everybody's Guide to Affordable, World-Class Medical Tourism by Josef Woodman, Healthy Travel Media, March 2007 Mapping the Market for Medical Travel by Tilman Ehrbeck, Ceani Guevara and Paul Mango, May 2008, McKinsey Quarterly.

28. WellPoint Overview ME NH WI MA CT OH NV IN IL CO CA VA MO KY GA TX WellPoint Serves Approximately 35 Million Medical Members One in nine Americans have coverage from WellPoint. NY BC or BCBS licensed plans UniCare >100K members

29. Wellpoint Inc. USA – Press Release • Health insurer WellPoint Inc. will dabble in medical tourism next year when it launches a pilot program that sends patients to India for some surgeries. • WellPoint's pilot program will allow people to travel to hospitals in either Bangalore or New Delhi for procedures like joint replacement or upper and lower back fusion. • WellPoint subsidiary Anthem Blue Cross and Blue Shield in Wisconsin will set up the medical care and take care of scheduling and travel service. • The insurer will cover the travel and lodging costs for both the patient and a companion. It will offer the program only for people who receive insurance through Wisconsin-based Serigraph Inc., a self-insured printing company that employs about 700 people in the U.S. and does business in India, which was part of the reason WellPoint picked that country.

30. Medical Tourism Landscape When would someone choose to leave the country for a medical procedure? • Anthem conducted an online survey regarding medical tourism • 160 consumers and 149 employers responded • 60 percent have traveled internationally • Respondents were willing to travel overseas for medically necessary or cosmetic procedures • Less than 30 percent with no incentives • 57 percent if travel expenses (airfare, meals, lodging) are covered for member • 67 percent if travel expenses are covered for member and one companion • 73 percent if travel expenses are covered for member and companion, plus a cash incentive

31. Proposed Incentives for Members • Members will have no member cost share for surgery claims when provided through the Medical Tourism benefit • No member copays • Patient can select a travel companion to accompany them • All travel arrangements and costs will be handled for the member and their selected companion • Airfare, hotel, transfers, visas, etc.

32. Why Medical Tourism New trend emerging • Rising medical costs • Increased cost sharing for insured members • Consumerism Lack of competition among providers domestically (geographic monopolies) New tools for an increasingly savvy consumer • Global marketplace • American corporations losing competitiveness with health care cost trimming away profits

33. Guidelines for Identifying Procedures for Medical Tourism (1) The procedure is elective in nature (2) The patient is able to travel (3) The surgery is commonly performed at the referral hospital with demonstrable quality outcomes (4) Local follow-up care upon return home can be arranged, if needed (5) The patient can safely travel within a reasonable time, post procedure

34. Member Eligibility Member Eligibility for Medical Tourism Benefit: • Covered member or adult dependent (18 years or older) • Employer coverage must be primary coverage • Member must be scheduled for an eligible Medical Tourism procedure (see separate list of eligible procedures) • Member must be otherwise fit to travel, with no other complicating medical conditions • Member must be interested in the Medical Tourism benefit (Medical Tourism must be an optional benefit)

35. Member Experience The Member: Talks to the surgeon to decide whether he or she is comfortable with the surgeon Decides they want to travel internationally for surgery Picks a date for the surgery Travels with a companion of his or her choice, through travel arrangements made specifically for the member Has surgery at an accredited facility with world-class surgeons

36. Apollo Research Findings US Market

37. AMA Guidelines for Medical Travel (a) Medical care outside of the U.S. must be voluntary. (b) Financial incentives to travel outside the U.S. for medical care should not inappropriately limit the diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or referral options. (c) Patients should only be referred for medical care to institutions that have been accredited by recognized international accrediting bodies (e.g. Joint Commission International-JCI). (d) Prior to travel, local follow-up care should be coordinated and financing should be arranged to ensure continuity of care when patients return from medical care outside the US. (e) Coverage for travel outside the U.S. for medical care must include the costs of necessary follow-up care upon return to the U.S. (f) Patients should be informed of their rights and legal recourse prior to agreeing to travel outside the U.S. for medical care. (g) Access to physician licensing and outcome data, as well as facility accreditation and outcomes data, should be arranged for patients seeking medical care outside the U.S. (h) The transfer of patient medical records to and from facilities outside the U.S. should be consistent with HIPAA guidelines. (i) Patients choosing to travel outside the U.S. for medical care should be provided with information about the potential risks of combining surgical procedures with long flights and vacation activities.

38. Challenges and Perceptions – U.S. Patients

39. Commonly Sought Procedures – U.S. General / Cosmetic surgeries and Cardiology account for more than 60% of the procedures

40. Focus Value Ratings While the general market is large, this procedure is often covered by health insurance. However, this is currently an area of excellence for Providers meriting further investment. Large and growing market. Frequently not covered by health insurance. Procedure required by individuals of all income levels. Motivation includes cosmetic and health reasons. Cardiac Bariatric Orthopedic Transplant Cosmetic Fertility Large market size, however this procedure is often covered by health insurance. For those without health insurance they may choose to delay or avoid treatment rather than pay out of pocket. Small market size. This is frequently covered by health insurance further diminishing the size of the market. Cost savings may not be sufficient to cover travel costs, already a well developed market in Latin America, does not correspond with hospital brand image for complex procedures. Small market size. South Africa has a significant hold on this Segment of procedures.

41. Messaging Cost Savings- same quality, but lower costs Source: IndUSHealth;; Procedures and Pricing; 2008.

42. Post-operative Care • Post surgery care is a major concern for most overseas patients. • Patients, who have returned to their home country, have expressed concerns over the ability to obtain prescribed medication or medical care, should there be complications after the surgery. • Medical institutions seeking to attract foreign patients should consider working with local hospitals/associations for referrals and offering complete care for the patient after they have returned to their home country.

43. Overall: Thailand, Singapore and India are most advanced in medical tourism ... Thailand Singapore India Malaysia Philippines No. of medical ~ 660 K2 ~450 K ~300 K ~300 K ~100 to 200 K tourists (2006)1 Annual growth • 12%3 • ~20% • ~25% • 28% • ~30% (from previous year) Revenues from medical tourists 750 Mn4 425 Mn 440 Mn 54 Mn 125 Mn (2006 US$)1 Revenues from • 20-40% • 30-50% • 10-15% • ~5-30% • <5%6 medical tourists (%) No. of hospitals • 3 • 11 • 8 • 0 • 2 accredited by JCI Recognition • “Top 10 international • “Best medical/ • Relatively new player HC destinations” wellness tourism in medical tourism - News Week destination” • Lacks international - Travel Weekly recognition (e.g. no 2007 profile in “Patients without Borders”)

44. ... with differentiated positionings Based on relative cost, quality, service, physical infrastructure and types of specialties Thailand Singapore India Malaysia Philippines Good quality Positioning High end / High end care No clear Low-cost quality elective & complex at the lowest positioning provider for tertiary care quality acute price overseas with friendly care Filipinos and service Micronesia Relative Treatment price Quality of medical care Service Physical Infrastructure Wellness, Focus Quaternary Tertiary Elective Wellness Elective, Tertiary Tertiary Quaternary Tertiary Elective ( “routine”1 ) (“routine”) Tertiary Poor Excellent

45. Key Strategic Considerations For Turkey, India & Asia Medical Travel is a promising new industry in India & Asia, offering prospects for hospitals to augment patient growth. It is with a clear view of the addressable market potential, internal strengths & limitations, as well as the level of external competition, that healthcare providers & facilitators may best move forward, to realize this potential.

46. Our Goal To make India the ‘Global Healthcare Destination’

47. Thank You