Medical tourism is stagnating and the go-go years of double digit growth are gone…for now at least.
The sector was the darling of hospital and clinics all around the world because it attracted cash paying patients for higher acuity services where margins are fatter. The first and fast movers did well, establishing leadership and brand dominance, then the late adopters piled in to get a piece of the action leading to commoditization and a flattening of the curve.
Now it’s COVID-19. The virus has exposed a significant weak link in the medical tourism business model. If people cannot travel freely and safely then international patient volumes and revenue start to shrink and shrink fast. I see this first hand here in Bangkok where one of the worlds biggest medical tourism hospitals reported a more than 80% drop in net profit last quarter.
So is this the beginning of the end or the inflection point for medical tourism?
The million dollar question coming out of the pandemic is this: will it materially change habits and preferences of medical tourists? COVID-19 has reset the chess board, and when the world is finally free to travel will these high value specialty tourists go back to the same old places to do the same old things?
I think medical tourism will bounce back, but it will be uneven. Here in Thailand, arguably the mecca of medical tourism, the government did an admirable job containing the spread of the virus in phase 1 and 2, but completely bungled the vaccination roll-out deemed essential to restarting tourism and the economy at-large. Hospitals and hotels are ready to welcome back tourists, but they are hostages of government policies that change with the wind.
COVID-19 has clearly disrupted travel patterns globally and supercharged trends towards more wellness and lifestyle focused products as more people look to prevent rather than just treat illness. Hotels and non traditional players are exploring new ways they can incorporate wellness and medically light services into their portfolio of guests services. And, of course, the pandemic has forever changed our reliance on digital technologies to communicate and connect.
Like all crisis moments, the response is everything. COVID-19 may just prove to be the kick in the pants tourism-dependent hospitals and economies need to rethink their business and marketing strategies. Those that are proactive and forward looking will be better positioned to react than those waiting for the return of the status quo.
One thing is for certain. COVID-19 will either be a cure or a killer for many in medical tourism sector.