Pandemic-related travel restrictions, and the redirection of medical resources to treat people with COVID-19 are demand and supply side shocks disrupting the cross-border trade in medical services (medical tourism).i The shocks are transforming the markets for providers serving international patients. Additionally, accelerated adoption of telehealth applications due to the pandemic, is further changing the dynamics in the cross-border markets for medical services.
Medical tourism – cross-border trade in medical services
The General Agreement on Trade in Services (GATS) of the World Trade Organization defines cross-border trade in health services in four modes.ii, iii
Medical tourism has historically focused on consumers (patients) travelling for medical care from one country to another country (Mode 2, Consumption Abroad) and hospitals establishing operations in another country (Mode 3, Commercial Presence). The COVID-19 pandemic has prevented or disrupted travel by consumers and pushed providers to develop telehealth to reach patients abroad (Mode 1, Cross-Border Supply of Services). This swift, and necessary change to remote channels has created greater access to services among some market segments, and further highlights inequities with others. Access to the Internet and/or smartphones become the barriers to care. Simultaneously, there is an accelerating, rapid adoption of health & wellness-related wearable devises among the developed economies, which are agnostic of the relative positions of the consumer and provider; another form of Mode 1, Cross-Border Supply of Services. Digitization of the channels (within ones’ own country and internationally) is a dynamic shift, which is still being sorted. While it is unlikely that the positive consumer experiences and systemic efficiencies realized by the burgeoning growth of telehealth and wearables will be scaled back after travel restrictions are relaxed or eliminated, how the medical oversight, liability and / or compensation matters will be addressed remain open questions.
In addition to the above, for cross-border trade in medical services, the commercial presence of hospitals abroad (Mode 3) will also be impacted by the pandemic. For example, Bumrungrad Hospital in Thailand was founded by a US company (Mode 3, Commercial Presence) and has developed a large global patient base over the last 30 years (Mode 2, Consumption Abroad). Travel to Thailand due to the pandemic and political instability have severely interrupted the volume of consumers being treated at Bumrungrad. Other healthcare providers such as QuironSalud (Spain) with operations in South America, and Moorfield’s Eye Hospital (United Kingdom) with a Middle East presence have also been impacted by the demand and supply side shocks of the pandemic. The financial challenges are prompting providers to reassess their method of engagement in cross-border trade.
Medical tourism market variables
The plummet of international travel has had a dramatic negative impact on Mode 2 medical tourism. Globally, international travel decreased by 87%, comparing January 2021 to January 2020. iv The continued pattern of lockdown/release/lockdown/release creates uncertainty and fear of infection will continue to deter foreign consumers from planning cross-border medical travel.
Consumers’ attitudes toward traveling are influenced by media, and the international coverage of the pandemic has been extensive and negative. Although recent vaccination distribution is being more favorably reviewed, the variability in travel guidelines, mask requirements and other issues has created confusion and frustration. These disruptions of Mode 2 travel to foreign destinations to consume care are likely to continue until the travel and tourism market channels stabilize broadly. Meanwhile, both consumers and providers will continue to utilize telehealth (Mode 1) domestically and internationally, with Mode 1 presenting both opportunities and challenges to providers and intermediaries in foreign destinations.
Medical tourism in the post pandemic period
Cross-border trade in medical services will continue to play a role in global healthcare service delivery in the post pandemic period. Medical tourism had been promoted as a form of economic arbitrage between countries, and as a way to access superior medical services in a foreign location. Countries with relatively low purchase power parity (PPP) were seen as destinations, and those with higher PPP as source locations. In addition to the cost differentials as drivers, consumers convinced of the superiority of services in a foreign destination will seek to travel to that location.
In the post-pandemic scenarios, price differentials (PPP) will continue to motivate price-sensitive consumers or their intermediaries (employers and insurance providers) to seek lower cost alternatives in cross-border locations. Other individuals, convinced of the superiority of services in a particular location or by a specific medical provider, will seek out and access services from a provider in a foreign location. Telehealth and digitization of health-related data will expand the ways consumers access medical care including the cross-border trade in medical services.
i Stackpole I, Ziemba E, Johnson P. Looking around the corner: COVID‐19 shocks and market dynamics in US medical tourism. Int J Health Plann Manage. 2021 Jun 6 : 10.1002/hpm.3259.
doi: 10.1002/hpm.3259. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8239577/
ii Mutchnick l, Stern DT, Moyer CA. Trading health services across borders: GATS, markets, and caveats. Health Aff (Millwood). 2005;Suppl Web Exclusives:W5-42-W5-51.
iii World Trade Organization. GATS: General Agreement on Trade in Services, Annex 1B, Pages 283-317;1869 U.N.T.S. 183(33 I.L.M. 1167 (1994). www.wto.org/english/docs_e/legal_e/26-gats.pdf.
iv UNWTO. Tourist arrivals down 87% in January 2021 as UNWTO calls for stronger coordination to restart tourism. UN World Tourism Organization web site. https://www.unwto.org/news/tourist-arrivals-down-87-in-january-2021-as-unwto-calls-for-stronger-coordination-to-restart-tourism. Published March 31, 2021. Accessed April 8, 2021.
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