Foreign patients flock to cheaper care

The foreign patients section at the towering glass and chrome Medanta Medicity hospital in Gurgaon is not unlike the arrivals lounge of a busy international airport. Patients from all over the world flock here for treatment, drawn by the value for money offered by Indian hospitals.

At this 17-hectare multi-specialty site in India’s National Capital Region, the privately owned medical group Global Health Pvt. offers 1,250 beds and more than 45 operating theatres. Cardiac surgery costs $6,000 compared to $20,000 in Russia, while a liver transplant that would cost more than $200,000 in the U.S. can be had for $14,000. Robotic knee surgery, a cutting-edge procedure, costs just $10,000 in India but upward of $80,000 in the Middle East and Australia.

Such attractive prices, coupled with a reputation for quality, have drawn patients from all over the world for treatments ranging from non-essential procedures such as dental and cosmetic surgeries to life-saving operations for liver disease. It is not uncommon for tourists to pop into hospitals simply for health checks.

The numbers are growing rapidly. India already nets $3 billion from treating foreign patients every year, with revenue growth estimated at 20% for 2015, according to a survey by the consultancy Grant Thornton. The same survey said that revenues from medical tourism in India would grow to $8 billion by 2020. India currently receives about 230,000 medical tourists. Apollo Hospitals, a private medical group, says it derives about 15% of its revenue from medical tourists.

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Madrakhimova Shaknoza, a 26-year-old liver transplant patient from Uzbekistan, said cost was a key issue in her decision to have surgery at Medanta Medicity. “In Uzbekistan we do not have world-class facilities. They simply do not have that level of tertiary care. There is also the matter of cost. Going to Russia for this surgery would have cost me about $100,000 whereas in Delhi it is about $14,000. Add $3,000 for me and my relatives to stay and travel costs — it’s a huge bargain. The hospital has a reputation back home that inspires confidence.”

Indian private hospitals are able to offer such good rates in part because of competitive equipment costs and price controls on many medicines. However, most of the cost difference is accounted for by government subsidies for land acquisition. In return, the government expects the hospitals to treat some of India’s poor for free.

People and technology
India’s public health system is overburdened and understaffed, mainly because the government spends only about 1% of gross domestic product on health. This compares, for example, with more than 6% in South Korea and more than 10% in Japan, according to the King’s Fund, a U.K.-based charity.

Ashok Agarwal, head of Social Jurists, a lawyer’s collective that helps India’s poor to access healthcare, said that private hospitals treating foreign patients had a moral duty to serve impoverished Indians as well.

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“India has no [legally-established] right to health,” said Agarwal. “This has meant that government-funded hospitals are not accountable. Many [private] hospitals are built on land given by the government at cheap rates. In a democracy, if those hospitals fail in their commitments to serve the poor, it is bound to lead to severe resentment.

Access to hospital care is a luxury for most Indians, and the infant mortality rate of 38 per 1,000 people, according to World Bank data, is shockingly high. Even the Republic of Congo, where the Bank says half the population lives in poverty, has lower infant mortality.

However, these statistics belie India’s world-class private health infrastructure. India has about 918,000 doctors, and at least 40 new multi-specialty private hospitals are set to open over the next three years.

To boost medical tourism, the government last June announced the establishment of a National Medical and Wellness Tourism Board aimed at standardizing procedures for overseas visitors. The board’s mandate includes providing worry-free transit for medical tourists. It will also simplify cross-border monetary transactions, which are cumbersome and involve piles of paperwork, especially for patients from Afghanistan and the Middle East.

Naresh Trehan, chairman of the Medanta Medicity hospital, said that demand from these countries and from Eastern Europe was strong because of India’s “holy trinity” of world-class human capital, groundbreaking technology and high standards of patient care.

Cutting edge technology and services include “cyber knife” non-invasive surgery knee surgery at Medanta Medicity, which the hospital says is unique in Asia, and a “flying doctor” service for emergency cases, mostly in South Asia and Dubai.

In a 2015 report, the consultancy KPMG said that highly qualified doctors and supporting medical staff, together with their ability to select the right hospitals to tackle complicated procedures, had helped to attract patients to India. The report also said that wider treatment options such as plastic surgery and dental implants had multiplied over the last decade.

Sunil Kapur, head of sales at Fortis Healthcare, another privately owned health group, said that “India has become a destination of choice for large numbers of African patients; this is followed by East Europeans and medical care seekers from West Asia [the Middle East].” Fortis offers customized services for overseas patients, including visa assistance, an interpreter and reception at the airport.

In view of robust demand, hospital chains are ramping up capacity. Fortis plans to double its bed count to 9,000 by 2021. Max Healthcare, owned by the Indian conglomerate Max India, invested $48 million in acquiring a new multi-specialty hospital near Delhi in 2015. Dubai-based AB Ventures is reportedly investing $100 million to build suites in a luxury five-star hospital in Mumbai this year.

In December, India Value Fund Advisors, a venture capitalist firm, invested $74 million in Cloudnine, an obstetrics and gynecological chain of hospitals, for a minority stake. Abraaj Capital of Dubai has invested $300 million for a 75% stake in the Indian CARE hospital chain.

Growth pangs
Despite such interest from the private sector, the Indian government has yet to embark on any real overseas marketing, unlike its counterparts in Singapore and Thailand, which also provide significant private medical services to foreigners.

Bangkok and Singapore are better connected to other countries, compared with Delhi and Mumbai, and both draw much higher numbers of medical tourists. India also suffers from relatively poor infrastructure and air pollution, which could be a significant drawback for some patients.

Another key concern for India is the lack of a legal framework protecting patients. Indian medical malpractice laws are nonexistent. If something goes wrong, there is little recourse and litigation could take years to reach resolution.

The private medical industry is confident about the future, however. Trehan said India’s reputation as a “medical hotspot” was likely to continue to grow, helped by its cost advantages. “In the long run these growth pangs are likely to give way to a steady and consistent flow of patients,” he said.

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