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Healthcare Tourism Paper

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  • 1. Executive Summary The demand for healthcare tourism to emerge is inevitable. A huge population from a variety of ethnic diversities, great economic background, and strong cultural relationships with other countries has made India a world-leading country and a force to be reckoned with. In this paper, we will provide a concise overview that explains what drives the demand of healthcare tourism to exist, and a brief explanation of why India is a suitable candidate to position itself to become a leader in healthcare tourism. The SWOT analysis formulated in this essay will point out the positive factors that encourage the development of the healthcare tourism sector, as well as the many external/internal hurdles and threats that India must address in order to uncover potential opportunities that could benefit the country as a result of promoting the healthcare tourism industry. There are multiple stakeholders that will be affected by the development of the Healthcare Tourism industry in India. Directly affected will be internal stakeholders, such as healthcare professionals, institutions and patients. Additionally, there are also external stakeholders that will be affected. Successful development of the Healthcare Tourism industry depends on the creation of a strategic plan that attempts to solve the major problems of how India can better compete with other countries, improve infrastructure to meet tourism demand, and position itself in order to appeal to the most beneficial target market(s). Based on a thorough review of the challenges for developing India’s healthcare tourism sector and an analysis of potential alternatives that pertain to promoting the healthcare tourism in India, the demands of a growing local population and a reputable healthcare sector lend themselves as key drivers for growth of India’s healthcare tourism. Therefore, the recommendation proposed maintains the Indian Government must step in to support the healthcare tourism in any way possible with an eye towards improving the plight of the Indian people as a whole. Through constant collaboration between local industry officials as well as officials
  • 2. from the private healthcare sector the country will be able to organize its leadership position on three fronts: cost advantage, quality healthcare, and a major tourist destination. OVERVIEW There has been growing demand for inexpensive, high-quality medical care due the amount of patients that are not medically covered by their insurance companies and the heavy growth of baby boomers, which needed extra care from health centers. Factors that supported the emergence of healthcare tourism included heavy reliance on out of pocket health expenditure, overburdened public healthcare system, non-coverage of selected medical procedures, and large price differentials for health procedures among countries. Many developing countries such as Thailand, South Africa, and Costa Rica have developed strong, low cost medical care specialties that are competitively priced compared to those of United States. India is a very densely populated country with strong economic influence all over the world. India has also made headlines as one of the top outsourcing destinations for many multinational corporations. The country’s revenue’s largely come from its services sector, mostly from its tourism industry. India should leverage the amount of profits it generates from tourists’ recreation, leisure, and holiday activities in response to the growing demands for inexpensive and high quality healthcare in order to attract more foreign customers. SWOT ANALYSIS Strength Setting up healthcare tourism in India is a marvelous idea, as India has been known to be one of the top foreign tourists’ destinations. Tourists visit India to do a variety of recreational activities. India has become the number one destination country for outsourcing due to its cheaper labor costs compared to
  • 3. other developed countries. This outsourcing factor has been great for amassing a greater quantity of stronger connections with other foreign countries. India also has many accredited private hospitals that offer great hospital services and use top of the line medical equipment at competitively lower prices compared to other foreign countries, especially United States. Aside from the high-tech medical equipment and great hospitality, those private hospitals also possess a high volume of educated doctors and nurses. Since India has a large pool of educated, English-speaking citizens, it is only natural that they have many medical professionals in their hospitals that are fluent in English as well. Weaknesses While there are many reasons why India should position itself as a leader in healthcare tourism, there are factors that could ruin its potential if left uncontrolled. Almost all of India’s hospitals are private, which makes them less accessible to the eyes of the public. This excess privatization of India’s healthcare sectors makes it even harder to promote healthcare tourism out there for the public. India also has very underdeveloped infrastructure. This is evident by lack of air connectivity to other many nations, unsatisfactory airport facilities, and bad road conditions that seemed to be the main sources of tourists’ complaints. Another bump on the road is the fact that India faces stiff competition in the health tourism market from other developing countries that have emerged before India’s ascent, such as Thailand. Opportunities There are definitely some areas that India could foresee as potential opportunities that could become potential competitive advantages in the healthcare tourism business. The first one is to add variety of benefit packages that comes along with customers’ healthcare payment to where they see fit. These benefit packages could be developed through partnerships with airlines to make it easier for foreign tourists to travel to India. For example, a benefit package would be created around a visitor’s healthcare itinerary so he/she does
  • 4. not have to worry about other factors such as accommodations. India could also develop partnerships with insurance companies to extend the insurance coverage for foreign customers. Partnering with more insurance companies could definitely benefit India, since not all foreign tourists are covered by their own insurance in other countries. Some of those foreign tourists could really use India’s healthcare and medical coverage, since some of them come from countries that have healthcare prices that are overpriced, such as those of United States and United Kingdom. India could also leverage its medical systems and procedures to comply with international accreditation standards in order to better compete in attracting more tourists. Another opportunity that could be exploited is for India to invest in R&D and IT sectors to develop its infrastructure, as the current infrastructure isn’t exactly up to par compared to other developing countries. Threats Just like in any new business sector that is trying to grow, there are many hurdles that get in the way for the business sector to achieve success. There are many healthcare tourism contenders such as: Thailand, Costa Rica, and South Africa that could pose as threats for India as a newcomer in healthcare tourism. Most of these competitors have strong Information Technology, and their IT has propelled their healthcare services as the best in the industry. Another potential threat for India is the potentially high-cost of traveling from overseas due to the lack of direct flights to India from developed countries. India has also been relying on the private healthcare sector to develop the nascent industry particularly through institutions such as Apollo Hospitals, Wockhardt, and Max Healthcare leading the charge. The reliance on the private sector is not adequate due to the overcrowded demands from the baby-boomers and other types of patients. The last thing that India needs to worry about is the fact that most tourists see India as a historical and cultural vacation destination instead of a healthcare tourism center, which is not good if India is trying to position itself as market-leader in the industry.
  • 5. Stakeholders Analysis Internal • Employees: The influx of patients will affect the jobs of doctors and nurses, who will need to be more organized in order to handle the increase of patients entering their offices and surgery tables.  Management: Hospitals will need management that can be reliable and responsible for accurately developing systems and operations that can successfully meet tourists demand and increases in patients. • Development committees: Indian officials will need to plan, develop, and implement a strategy for the sector of healthcare tourism so that the supplies can effectively meet the demand and the medical tourists will be satisfied with their experiences. • Medical service facilities: Hospitals, spas, alternative therapies, cosmetic surgery facilities, and additional medical treatment facilities will have to grow to meet the demand and influx of patient volumes. • Medial schools: The education system in India will have to increase the number of doctors and nurses they produce, while also keeping a commitment to high-rating standards. • Patients: Indian patients may potentially experience longer wait times for health services and treatments by specific specialists because of the increase in (international) patient volumes. External • Suppliers: medical equipment suppliers will benefit from their influx in
  • 6. dependency on their top standard equipment. With more usage, more equipment will be bought from the suppliers (due to various needs and replacements). • Government: the Indian government may need to step in and support in future growth, and infrastructure development, of the healthcare tourism sector. • Local Population: Indian locals will be sharing their communities with and increased number of international tourists. • Service industry: Air, ground transportation, and hotels that are a part of the India service industry will need to meet demand of increase in customers that use their services and expect high customer service. • Transportation industry: Air and road vehicles will see greater volumes of traffic due to increased visitors to India. This could cause more than normal wear and tear to their physical conditions. • Partnerships: Insurance companies who partner with Indian health services will benefit from the ability to offer new coverage to certain customers who may be willing to pay additional premiums for healthcare tourism coverage. • Competition: Established healthcare tourism locations will lose market share and international patients. • Economy: As healthcare tourism increases, the country will receive more foreign currency and see a consequent boost in GDP. Central Issue Statement
  • 7. In August of 2006 Mr. K.R. Arya, the Director of Overseas Marketing Division for the Ministry of Tourism in India, was given a task to develop a strategic plan on how to develop India into a major health destination. He faced major obstacles because he would have to decide on how to address the issue of competition, infrastructure growth to meet tourist demands, positioning, and selecting the appropriate target markets. Major Problems Primary Problem  Competition:  Thailand, Costa Rica and South Africa were already established healthcare tourism locations, experiencing growth in tourist’s volumes per year, and increasing in medical service diversity and quality. Also, these locations provide stiff competition because of the vacation elements they offer the healthcare tourist.  The estabished competitive environment could harm India’s ability to gain strong, competitive, market share in the healthcare tourism industry.  Infrastructure:  55% of travelers to India claimed poor road conditions as a criticism of traveling to India. Also, 30% of long-haul travelers criticize the high cost of airfare and lack of direct flights to India during their travel. In addition, the ministry of Tourism, which is the committee responsible for planning how the India infrastructure will meet the demand of potential and expected healthcare tourists in the near future, admits to a dependency on the private health sector to meet these demands while at the same time doubting the sectors’ ability to meet those demands.  The weak infrastructure in India could hurt the healthcare tourism sector image, cause healthcare tourists to choose competitors, and also cause
  • 8. for India to not meet the demand of tourists and/or deliver the (possible) promise of high quality care and luxury vacation to its potential customers. Second Problem  Positioning:  India is a highly visited location for tourists from long-haul countries and other locations. It experienced ~25% in foreign exchange earnings form tourists from 2003-2005. The major reason people travel to India is for leisure, recreation, to observe and learn the rich cultures, society, and landscape.  The current image of a vacation spot excludes the healthcare services. If India does not transform this image to include that it is a location of healthcare services for tourists, the full healthcare tourism sector may dissolve.  Target market:  During strategies and campaigns to promote healthcare tourism in India, the industry and players within (the hospitals), have been targeting various demographic and geographic markets such as developed and developing countries, and neighboring as well as long-haul countries.  Targeting numerous markets could in effect turn the Indian healthcare tourism promotions into mass marketing, instead of directly targeting the strongest markets (using targeted messages) that offer the greatest revenue potential to the country. This could affect the volume of potential customers. Significant Factors  Resources: India has competitive medical service resources of ~500,000 doctors and ~737,000 nurses in their medical system and also produces ~20,000 more per year. They have advanced information technology, which
  • 9. allows them to offer telemedicine services to patients outside of India. These strengths can be used to position India as a leading competitor against Thailand and other established healthcare tourist locations.  Transportation industry: The poor road conditions, airport facilities, and lack of direct airline connections to long-haul countries, as well as the high cost of airline travel from around the world to India could harm India competitively as they attempt to become a leading location for tourists to receive medical treatments for life threatening illnesses.  Facilities and equipment: India has high-quality medical facilities (78% of which are private) and equipment. It has accredited hospitals and has decreased trade tariff import duties ~20% to enable a plethora of state of the art US medical equipment to enter India. Its major private hospital, Apollo rd hospital, is the 3 largest hospital in the world. Apollo provides healthcare tourism concierge services (airport greeting, registration, discharge, and post treatment travel arrangement services), and partners with US health insurance companies. These factors will allow India to position itself as a leading quality medical service provider and target the developed, long haul market. th  Prices: Medical treatment in India is 1/6 price that of developed countries. This economic factor will positively allow India to target developed markets and compete with the potential patient’s home country medical system.  Marketing: Private hospitals in India have been marketing independently to health tourists. They have been offering different specialties to target audiences. This initial beginning could enable easier development and entry for India as a medical tourist location, but could also cause for potential confusion in the marketplace as India attempts to standardize and strategically carry out a comprehensive marketing program for their
  • 10. healthcare tourism sector.  Organizational structure: 78% of healthcare services in India are privatized, which could hamper the ministry of tourisms ability to control the development necessary to meet health tourist’s demands.  Tourism: India experiences a large volume of international tourists from both developing and developed countries, but ~30% more from developed countries. Visitors tend to stay in India for longer durations (roughly 7-18 days) than the average 16 days that vacationers stay in other countries during vacation. This trend will enable India to more easily target its healthcare services to developed markets.  Language: India has a large population of English speakers so it is a large factor affecting the choice of destination for tourists visiting India. This commonality will strengthen India’s position as a competitor in targeting US and UK patients against other medical tourism locations that do not as widely speak English.  Products and Services: The Indian medical system offers a high volume of different and popular medical services carried out by specialist and super specialists, such as open-heart surgery, pediatric heart surgery, hip and knee replacements, cosmetic surgery, dentistry, bone marrow transplants, and cancer therapy. This diversity in service offerings will strengthen India’s ability to position, compete and target certain markets.  Image: 1. India is seen as a vacation location for travelers to experience leisure, recreation and also learn about and experience a rich culture and landscapes. Transforming this image to include healthcare services for
  • 11. tourists could be a challenge on deciding how to position itself. 2. The Indian medical system has a great reputation built from receiving accreditations for training centers, hospitals, research and PhD programs. In addition, India has experienced success in major surgeries, meeting international standards and lower than average rates of mortality and infection due to medical treatments. This high standard image will offer India the ability to position itself as a strong medical services location and compete against other medical tourism locations. Evaluation of Alternatives/Recommendation/Implementation Alternatives (1 or 2 or 3): 1. India tourism agency should work in collaboration with the private hospitals to target their services through separate market segments to attract visitors from both developed and developing nations. OR 2. Given India’s good reputation for delivering quality healthcare, India should leverage its tourism potential through partnerships with European and US tourism boards to offer comprehensive travel packages and position India as a land of enchantment and a place to holistically improve the mind, body and soul. OR 3. India tourism Ministry could establish a medical tourism committee comprised of officials from the Ministry of Commerce, Ministry of Public Health and the major private healthcare institutions to develop a comprehensive marketing framework to leverage the country’s low cost advantage, its quality of healthcare services, and vacation aspect.
  • 12. Marketing planning opportunities Networking • Insurance companies with foreign healthcare providers and multinationals • Promotions through professional meetings and medical conferences • Government web-based bulletin boards for the latest in healthcare developments in India Publicity • Publicity events – Government projects, partnerships • TV/Radio – World wide cable networks • Press Releases – Government, insurance companies, healthcare institutions Advertising • Newspapers • Magazines • Sponsorships • Web Cross-Promotions • Giving discount coupons/certificates to a complementary business such as travel • Co-sponsor special events and promotions • Co-sponsor with non-profit organizations Recommendation/Basis for Recommendation Recommendation: India tourism Ministry should establish a medical tourism committee
  • 13. comprised of officials from the Ministry of Commerce, Ministry of Public Health and the major private healthcare institutions to develop a comprehensive marketing framework to leverage, and promote, the country’s low cost advantage, quality of healthcare services, and vacation aspect. Basis for Recommendation: In order to capitalize on India’s success in healthcare sector, the country must garner public support in order to incentivize the Government to implement project initiatives pertaining to improving people’s negative perception of India’s public hygiene and facilities such as airports, hotels, and roads. By establishing an association between government agencies and private healthcare institutions, the Government will be in a position to better understand the needs of the healthcare tourism industry and leverage that with the needs of its local population in an effort to stimulate the local economy. As infrastructure improves, it will enable India to position as a vacation location that also offers healthcare services. This will open doors to directly target developed, and long haul, markets who benefit from the low cost of healthcare tourism, and also be a strong leader against competition in the industry. Implementation Strategy: The newly formed sub-committee will develop a three-pronged marketing approach based on three types of medical tourists: Foreigner’s coming especially for treatment, foreigner’s coming for treatment and leisure, and expatriates. For those coming specifically for treatment, the government should implement uniform policies in order to satisfy international accreditation standards in order to facilitate the medical process. For those coming for treatment and leisure, the Government should offer comprehensive vacation packages in order to mitigate the costs from airfare and accommodations. Lastly, for expatriates, the Government should implement policies that ease regulations between insurance companies and multinationals to ensure they can also benefit from India’s vast array of medical services.
  • 14. Contingency Plan: Best-case scenario India’s GDP will increase to levels never seen before as a result of India’s ability to market its healthcare tourism industry across national boundaries. Worst-case scenario Healthcare tourism remains dominated by the private sector and does not materialize into the next big success story of India due to India’s weak infrastructure and the Government’s lack of public support for the industry.