Globalization of the Medical Industry: Future Trends & Medical Tourism

1. University of MinnesotaThe Healthcare MarketplaceMedical Industry Leadership InstituteCourse: MILI 6990/5990Spring Semester A, 2015 Stephen T. Parente, Ph.D. Carlson School of Management Department of Finance sparente@umn.edu

2. Lecture Overview • International Health Markets: Globalization of the Medical Industry • Future trends in the healthcare marketplace • US Health reform (Episode VI)

3. I. Globalization of the Medical Industry Key Premises • Human disease and health care needs are not restricted within national boundaries – access to delivery of health care is a fundamental necessity for all human beings. • Human creativity is not restricted within national boundaries – development of health care can occur anywhere around the globe.

4. I. Globalization of the Medical Industry Conventional Wisdom: “The Best Money Can Buy” • Wealthy foreign patients (from Middle East, Europe, Latin America and the Caribbean) are traveling to the U.S. for the best care the money can buy – paying cash upfront for stateside surgery and routine checkups. • U.S. hospitals are catering to – and profiting from – the wealthy foreign patients. • Large medical centers offer concierge services that cater to traveling families’ banking, dining and shopping desires. • John Hopkins Medicine International – 40 full-time and 45 on-call interpreters • Mayo Clinic – 38 full-time interpreters and 25 on-call employees • Cleveland Clinic – 35 staff interpreters • Texas Medical Center – 10 full-time interpreters and 25 bilingual staffers

5. I. Globalization of the Medical Industry Globalization & Medical Tourism “Globalization. Hospital care is becoming an increasingly global market with nations such as Thailand, India, and Taiwan pursuing“medical tourism”as an economic development strategy. Americans can travel to these countries for surgery as varied as hip replacement, heart bypass, and plastic surgery for a fraction of what similar care costs in the United States. Self-paying Americans are sure to find such arrangements attractive, and it is just a matter of time until health care brokerage houses are set up to facilitate these transactions.” (Source: “Consumer-Driven Health Care: Just A Tweak Or A Revolution?,” by Greg Scandlen, Health Affairs, Vol. 24, No. 6, p. 1557) “Informed, motivated consumers can have an impact on the entire health care system.”

6. II. Medical Tourism: Evolution and Growth Definition Medical tourism is a term that has risen from the rapid growth of the industry where people from all around the world are traveling to other countries to obtain medical, dental, and surgical care while at the same time touring, vacationing, and fully experiencing the attractions of the countries that they are visiting. (http://www.indhp.net/medtour.htm)

7. II. Medical Tourism: Evolution and Growth Historical Perspective “Medical tourism is actually thousands of years old. In ancient Greece, pilgrims and patients came from all over the Mediterranean to the sanctuary of the healing God, Asklepios, at Epidaurus. From the 18th century wealthy Europeans traveled to spas from Germany to the Nile.” (http://www.medsolution.com/media_facts.asp)

8. Neolithic & Bronze Age Mineral & Hot Spring visits Middle Ages Thermal Springs 16th century “Fountain of Youth” 17th/18th century Spa 19th century Sea & Mountain Air (TB sanitarium) 20th century “Health Farms” or “Fat Farms” II. Medical Tourism: Evolution and Growth Historical Perspective With An Approximate Timeline

9. II. Medical Tourism: Evolution and Growth

10. II. Medical Tourism: Evolution and Growth Key Drivers of Medical Tourism The Insurance Factor • An estimated 47 million Americans have no health insurance • More than 108 million people in the US are without dental insurance Money Matters • Nearly two in five adults, approximately 77 million adults, in the US struggle with medical bills, have recent or accrued medical debts or both. • Almost half of the two million Americans who file for bankruptcy do so because of medical expenses. (http://www.medsolution.com/media_facts.asp)

11. II. Medical Tourism: Evolution and Growth Key Drivers of Medical Tourism: Cost of Service (All costs in US$)

12. II. Medical Tourism: Evolution and Growth Supply Chain of an International Patient: The Process

13. II. Medical Tourism: Evolution and Growth Indian Health Care Capability • Over 60,000 cardiac surgeries done per year with outcomes at par with international standards • Multi-organ transplants like Renal, Liver, Heart, Bone Marrow Transplants, are successfully performed at one tenth the cost. • Patients from over 55 countries are treated at Indian Hospitals. (Source: Dr. Naresh Trehan, Executive Director, Escorts Heart Institute And Research Centre Ltd, New Delhi, Sept. 21, 2005)

14. 0.5-1 22-30 0.5-0.7 0.5-0.7 7-9 Medical equipment could account for 20- 30% of investment in Beds (Rs.20,000 to 40,000 crore) 13-20 Investment in secondary beds Investment for other health professionals (e.g., pharmacists, technicians, administrators) Investment in tertiary beds Investment in medical colleges* Investment in nursing schools Total investment required * Excludes investment in bed capacity to avoid double count with investment in secondary/tertiary beds III. Medical Tourism: The Case of India ESTIMATES US $ in billions Investment Required in the Next 10 years to Bridge the Gap Note US$ 1= Rs 45 to 50 1 crore = 10 million (Source: CII-McKinsey & Company Report 2002) (Source: Dr. Naresh Trehan, Executive Director, Escorts Heart Institute And Research Centre Ltd, New Delhi, Sept. 21, 2005)

15. Discussion Questions • Is medical tourism a sustainable phenomenon or simply a passing fad? If so, why? If not, why not? • How is medical tourism going to affect the health care in: • The developed countries, e.g., U. S., England, and Canada? • The developing/underdeveloped countries?

16. STP Disruptive Innovation Tourism Idea: Integrate These

17. Population and Demographics Key Issues for the 21st Century Health and Lifestyle Technology

18. Production of Health Demographics Genetics HEALTH Lifestyle/ Health Behaviors Medical Care

19. Demographics

22. Health Bads and their Consequences • Smoking • Cigarette smoking is the leading cause of lung cancer (90% of deaths); chronic bronchitis; emphysema (COPD), and a major cause of heart disease and stroke • Associated with additional cancers (e.g., bladder, pancreatic, and cervical) • Vision and hearing problems and slowed healing from injuries • Responsible for 443,000 deaths per year in 2010 • Obesity • Linked to hypertension, high cholesterol, coronary heart disease, type 2 diabetes, depression, and various types of cancer • Responsible for 400,000 deaths in 2010 • $75 billion in medical care expenditures in 2003 • $190 billion in 2012 • Excessive Alcohol Consumption • Associated with lost productivity, disability, early death, crime, neglect of family responsibilities • Motor vehicle accidents while driving under the influence • 80,000 deaths from alcohol abuse in 2010

23. Smoking Prevalence Over Time www.cdc.gov, 2004

24. Smoking Prevalence Over Time

25. Smoking Prevalence Over Time

26. CDC, 2004

28. Obesity Trends* Among U.S. AdultsBRFSS, 1985 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

29. Obesity Trends* Among U.S. AdultsBRFSS, 1986 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

30. Obesity Trends* Among U.S. AdultsBRFSS, 1987 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

31. Obesity Trends* Among U.S. AdultsBRFSS, 1988 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

32. Obesity Trends* Among U.S. AdultsBRFSS, 1989 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

33. Obesity Trends* Among U.S. AdultsBRFSS, 1990 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14%

34. Obesity Trends* Among U.S. AdultsBRFSS, 1991 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

35. Obesity Trends* Among U.S. AdultsBRFSS, 1992 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

36. Obesity Trends* Among U.S. AdultsBRFSS, 1993 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

37. Obesity Trends* Among U.S. AdultsBRFSS, 1994 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

38. Obesity Trends* Among U.S. AdultsBRFSS, 1995 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

39. Obesity Trends* Among U.S. AdultsBRFSS, 1996 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19%

40. Obesity Trends* Among U.S. AdultsBRFSS, 1997 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

41. Obesity Trends* Among U.S. AdultsBRFSS, 1998 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

42. Obesity Trends* Among U.S. AdultsBRFSS, 1999 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

43. Obesity Trends* Among U.S. AdultsBRFSS, 2000 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% ≥20%

44. Obesity Trends* Among U.S. AdultsBRFSS, 2001 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

45. Obesity Trends* Among U.S. AdultsBRFSS, 2002 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

46. Obesity Trends* Among U.S. AdultsBRFSS, 2003 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

47. Obesity Trends* Among U.S. AdultsBRFSS, 2004 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% ≥25%

48. Obesity Trends* Among U.S. AdultsBRFSS, 2005 (*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person) No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

49. Obesity Trends* Among U.S. AdultsBRFSS, 2010

50. Thought questions: Health behaviors • If lifestyle behaviors are such large contributors to mortality and morbidity, why don’t we allocate more resources toward education? • What tools does/can the government use to modify behaviors of individuals? • In what ways might private insurers or providers try to modify behaviors of individuals?