Out of the Box|09/07/2012

How Consumerism, Globalization and the Internet are Changing Healthcare

It was January 2005, and my secretary at the time came into my office and handed me a note. The message was brief, but clear. “Producer from 60 Minutes called. Please call back. Urgent.”

Four months months later, Bob Simon, the veteran “60 Minutes” journalist was at Bumrungrad International in Bangkok, Thailand, the hospital where I worked, to do a story on medical tourism.

If you don’t know “60 Minutes”, it is the most successful television broadcast in history. “60 Minutes” is America’s number one news program, and has won more Emmy Awards than any other primetime broadcast. It is a cornerstone of TV journalism in the USA, attracting more than 13.5 millions viewers every week to its Sunday evening broadcast.

The 12 minute segment on medical tourism aired in April 2005, and showcased two hospitals – Bumrungrad International, where I was the Marketing Director, and the Apollo Hospital in Delhi, India. It focused on four ordinary Americans who decided to do a most extraordinary thing — travel half way around the world to developing countries for medical treatment because it was cheaper, better and faster than what they could (or could not) get back home.

Overnight, medical tourism, and the hospital where I worked, entered the mainstream consciousness of America on the back of one of the country’s most watched and respected TV programs. It was, as the saying goes, the kind of advertising money just can’t buy.

While sitting in the comfort of their living rooms, 13 million Americans learned how Byron Bonewell, a middle aged, small business owner from Shreveport, Louisiana traveled to Thailand, a place better known for beaches and brothels, for life saving heart bypass surgery.

The power of the piece was Mr. Bonewell himself. He was your everyman.

Uninsured and suffering from congestive heart failure, Mr. Bonewell could not afford the $100,000 he would have to pay out-of-pocket for heart surgery. He had two choices – death or bankruptcy. Mr. Bonewell had resigned himself to the inevitable, because as he told Bob Simon, “I guess I figured I’d rather die with a little bit of money in my pocket than live poor”.

That was until he read a story about Bumrungrad in Businessweek magazine while waiting to see his cardiologist in Shreveport. When he returned home, he logged on to the hospital’s website, found his doctor and two weeks later was traveling to Thailand. The total cost of treatment was just under $20,000.

He saved a fortune and he saved his life.

The “60 Minutes” segment was a watershed moment for medical tourism (and Bumrungrad International). The story unleashed a tsunami of interest from the world’s largest healthcare market. Overnight, emails came pouring in from thousands of uninsured and underinsured Americans who wanted to know more about treatment options at this hospital half way across the world with a funny name.

The rise of medical tourism was not lost on the American Medical Association (AMA), the American Hospital Association (AHA), or major US insurers (Cigna, Aetna, United Healthcare). The AMA published guidelines on medical tourism that were remarkably straightforward and sensible. The AHA dismissed medical tourism as a viable threat to US hospitals, and US insurers sent their respective medical directors around the world on familiarization trip to see what all the fuss was about.

Depending on where you sat, medical tourism was a either a dud or a potential time bomb that had, as the preeminent Princeton healthcare economist Uwe Reinhardt put it, “the potential of doing to the U.S. health care system what the Japanese auto industry did to American carmakers.”

This analogy has a more than a grain of truth in it.

In 1973, the OPEC oil crisis catapulted petrol prices to historic levels in the US, and the Japanese responded by exporting its small, fuel-efficient cars to America. At first, Detroit first laughed it off. No self respecting American would drive a sardine can on wheels with a name like Datsun, they said. When the Japanese imports kept coming, they ran to Congress to protect them, but protectionism only slowed the inevitable. Detroit finally responded by trying to design and build small cars that would compete against the Civic and Accord.

When was the last time you saw a Vega, Pacer or Pinto on the road?

Over the past 40 years, US automakers have been out-gamed by Japanese (and now Korean) manufacturers who are simply better at adapting their businesses and innovating new products for a global market. Asian manufacturers gained a foothold on price, captured market share through quality, and now lead because of innovation. Today, you don’t buy a Toyota Prius because it’s cheap; you buy a Prius because it is green technology.

Like Japanese cars, medical tourism is a disruptive agent in healthcare. Sitting in his home in Shreveport, Mr. Bonewell was able to call up the credentials of a US trained Thai doctor, connect with hospital via email, book his 20 hour flight online and save $80,000 dollars in the process. Multiply that a couple of hundred thousand times, and you have a business that everyone wants a piece of.

Medical tourism exists because there are wide disparities in cost, quality and access in healthcare markets all around the world. Indonesians leave home to get medical care in Singapore because they don’t trust their doctors. Americans travel to Mexico because they cannot afford care at home. Canadians travel to the US because they don’t want to wait for surgery.

Regina Herzlinger, author of “Who Killed Healthcare” and professor at the Harvard Business School, frames the medical tourism argument by stating, “The medical travel market is a bit over-hyped today, but economics dictates why it will become huge over time: if a supplier has very high prices and erratic quality, it creates an opening for nimbler rivals.”

In a word, medical tourism is arbitrage.

Today, any consumer anywhere in the world enabled by a computer or smartphone can now shop globally for heart, back or prostate surgery. Asian hospitals, like Bumrungrad, have taken the lead in packaging their products for sale on the web to a global audience.

Packaging? Products? Sounds like manufacturing or retail. It is. Medical tourism is packaging healthcare in a way that consumers with cash and choice understand. That’s the real medical tourism story; not patients traveling abroad for care. That has been happening for centuries.

Look at Bumrungrad. It treats over 1 million patients a year, generates 55% of its revenue from foreign patients, has more customer service staff than nurses, and markets fixed priced surgical packages on its website. Bumrungrad is a medical tourism juggernaut because it has refined its system to cater to medical tourists.

Globalization, the internet and consumerism are forcing doctors and hospitals all over the world to adapt their business models to consumer demands for transparency and speed. It happened in banking, retail, tourism and financial services and now it’s coming to healthcare.

Understanding what consumers want in healthcare is pretty simple. They want Trip Advisor. Show me options, tell me the price, and give me consumer feedback. The Health Research Institute at PriceWaterhouseCoopers conducted a survey of 200 health executives around the world and “satisfying more demanding/empowered patients” was the third most difficult challenge impacting their healthcare systems, after meeting demands of an aging population and controlling costs.

Winning the hearts and spines of medical travelers is a lucrative business, but it is hard work and requires organizations to rethink and restructure how they deliver care and market their services. That’s the catch. Hospitals and doctors have to adapt to new market realities where the consumer, not the doctor, is the center of the universe.

As Bumrungrad’s Marketing Director from 2001-2007, I was part of a paradigm shift – a real one not the sound bite. I saw a no name hospital in a developing country attract hundreds of thousands of patients from around the world not because Bumrungrad has the world’s best doctors or best technology or the cheapest price. Bumrungrad assumed leadership in medical tourism by delivering services and turning patients into disciples that wanted to tell their story.

In today’s world order, nothing is more powerful than creating a community that wants to share their experience with your brand. It is the engine that powers Facebook, Instagram and Trip Advisor, and ‘sharing’ is exactly what Byron Bonewell did on 60 Minutes. One man sharing an honest experience that 13 million people could relate to. Ka-pow!

As a healthcare marketing consultant, hospitals and healthcare organizations contact me hoping that I can help them recreate the Bumrungrad magic for their brand, and more than a few walk away disappointed when I tell them that I cannot…or at least not in the same way.

“60 Minutes” did not ‘make’ Bumrungrad; it was a by-product. The hospital won mind and market share adapting quickly to a changing marketplace. It was not necessarily the first mover, but rather the fast mover. The hospital responded to global events like the 1997 Asian economic crisis, 9/11, the 2003 SARS scare and the US healthcare crisis by providing the right product at the right time. Do that once and you are lucky do it twice and you are smart.

Bumrungrad embodies the explosive growth and innovation we have come to expect from Asia. From Turkey to Taiwan, Asia is positioned to become the new supplier of medical services to the world with hospitals that look like hotels; US trained doctors, and brands that will someday rival Mayo, Cleveland Clinic and Johns Hopkins.

Asia is now just catching up to the spending trends we have seen in the rest of the world. It is predicted that by 2020, healthcare spending will consume 21% of the GDP in the US and 16% of GDP in OECD countries as they try to come to grips with fixing an infrastructure that simply cannot cope with populations that are getting older, fatter and sicker. Aging, lifestyle and chronic diseases are forcing employers, insurers and governments all around the world to rethink a better, faster and more efficient delivery model.

Like in car manufacturing, Asia has a chance to redefine healthcare through innovation. Unlike the US, Asia is not locked into an insurance-based reimbursement model serving an aging market with too little skilled labor. Asia is an eclectic mix of cash and insurance systems, young and old populations, developed and developing markets.

Scanning the horizon, the smart money in healthcare is being spent on building capacity, brands, audience and access. From India to Indonesia, investment dollars are pouring into the region to build capacity to meet the needs of emerging economies that want more healthcare services. But for all the investment dollars being spent on bricks and mortar, it is less clear how hospitals are spending their money to build audience and create better access to their doctors. That’s the whitespace in healthcare and where the next Bumrungrad will be.

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