Role of Health Tourism in Global Health Service Crisis

Anil K MainiPresident – Corporate Development

Apollo Hospitals Group

Global Medical Tourism Market

• Important source of revenue in developing nations– Revenues exceeded US$ 20 Billion in 2004– Revenues expected to grow to US$ 100 Billion

by 2012

• Indian medical tourism growing at 15% annually

Source: Medical Tourism: Global Competition in Health Care by Devon M. Herrick, November 2007, National Center for Policy Analysis.

Strong Drivers for Medical Travel

• Aging overseas population.

• High cost of healthcare in developed countries.

• Long waiting periods for tertiary care.

• Large un-insured & under insured healthcare market.

• Lack of tertiary care facilities in developing and under-developed countries.

Medical Tourism Patients

– 40 percent from less developed nations seek advanced, high quality care

– 32 percent from developed nations seek higher quality care from advanced hospitals in developing nations

– 15 percent from countries with socialized medicine who seek faster access and no waiting lists

– 13 percent from developed nations seek healthcare at lower costs than available at home

• Primarily from the U.S.

40%

13%15%

32%More HighTech

Lower Cost

Faster Access

Better Quality

Source: Mapping the Market for Medical Travel by Tilman Ehrbeck, Ceani Guevara and Paul Mango, May 2008, McKinsey Quarterly.

Fastest Growth Potential is in the Market Segment

Seeking Lower Costs

Recent McKinsey study identified the major reasons patients travel abroad for medical care

Three key blocks of providers of medical tourism Americas, EMEA and S/SE Asia

Americas Europe / Middle East/ Africa (EMEA) South / South East Asia

UK

Canada

Czech Rep. Hungary

US Japan

Antigua2

Mexico Costa Rica Philippines India Barbados2

U.A.E Thailand Brazil

Malaysia Singapore

Australia

S. Africa

Source of medical tourists for South / SE Asia1

Providers of treatment

Americas Europe / Middle East/ Africa (EMEA) South / South East Asia

UK

Canada

Czech Rep. Hungary

US Japan

Antigua2

Mexico Costa Rica Philippines India Barbados2

U.A.E Thailand Brazil

Malaysia Singapore

Australia

S. Africa

India & Apollo: An Emerging Healthcare Hub in South-Asia

The Apollo Story

• The Apollo Hospitals Group was started by Dr. Prathap C.

Reddy in 1979

• The Group started its first hospital in Chennai in 1983 with a

initial bed strength of 150

• Over the past 25 years the bed strength today stands at over

10,000

• With over 44 managed and owned hospitals, Apollo is Asia’s

largest healthcare network

Touched over 12 million lives

6,40,000 Preventive Health Checks

Treated over 75,000 Foreign Patients from 75 countries

Done over 100,000 cardio thoracic surgeries

Done 10,000 Kidney Transplants, 350 Bone Marrow Transplants

First successful liver transplant in India, at Apollo Delhi Pioneered interventions and surgical procedures

Apollo Delhi first hospital to be accredited by JCI, in India

Apollo Group - Medical Achievements

Our Objective

• To create a long term “win–win” Healthcare Delivery Strategy for overseas Patients and Payers.

• To provide premier value-added services that allow overseas patients to effectively leverage, emerging cost effective global medical treatment alternatives.

• Focused on treatment of acute illnesses, elective surgeries like Cardiology, Cancer, Orthopedics etc.

• Focused on Wellness, Rejuvenation, Preventive Health, Image Health, combined with Traditional Medicine like Ayurveda, Yoga etc.

Medical & Health Travel

Medical TravelMedical Travel

Health TravelHealth Travel

Is There a Drop in Medical Travel?

Yes

For Health Travel for cosmetic & dental surgery, wellness etc.

No

For Medical Travel for high end Tertiary Care & Quaternary Care

(For Life Threatening Diseases)

Patient/Market Profile for Medical Travel

• Countries not having adequate healthcare services (SAARC, Middle East, Gulf, CIS and Africa).

• Un-insured and under insured overseas patients mainly from USA. Large number of US Insurance majors & Corporates looking at cheaper healthcare options, overseas.

• Waitlisted patients in UK and Canada.

• Patients seeking procedures not covered by Insurance e.g. Dental, Cosmetology, Bariatric etc.

Our Proposition Clinical outcomes on par with the World’s best Centers

Internationally qualified & experienced Specialists

Technology Edge – 3rd Generation equipment & infrastructure

Competitive costs – 1/10th of costs in the West

Quality of service:

No waiting timeJCI Accreditation Patient centric care

Choice of location for patients in India, among Apollo locations

Medications are also much cheaper, often 50% of that in the US

English speaking staff & Doctors

Key Evaluation Criteria

• Hospital reputation• Doctors training & reputation• Cost• Post-operative care• Proximity• Convenience• Visa availability• Cultural similarities• Family and friends' recommendation

Main Super-Specialties Sought

•Cardiology

•Joint Replacements

•Cosmetic Surgery & Dental

•Spine Surgery

•Bariatric Surgery (Gastric Banding)

•Cancer

•IVF

•Kidney & Liver Transplants

•Bone Marrow Transplant

Auxiliary Services

Services to the patients start from the moment they contact the

Hospital till the time they land in India and leave back for their home

country. Some of these auxiliary services include:

Airport pick-up & drop

Visa/Sightseeing

arrangements

Translators

Coordinating appointments

Accommodation for

companions

Locker facilities

Cuisine

320 Slice CT Scan PET CT

Cutting Edge Technology

3.0 Tesla MRI

CyberKnife

Role of Telemedicine

Now, Apollo has established

this concept in overseas

markets like Kathmandu,

Lahore, Khartoum, Lagos,

Aden, Colombo & Dhaka.

Apollo is a pioneer in the field of Telemedicine and is credited with being the first to set up a Rural Telemedicine Centre in 1999.

Soon, Telemedicine will be a very important cog in the Medical Tourism wheel & all Providers and Facilitators will need to use it effectively.

Cost Advantage

PROCEDURE COSTS IN INDIA & US

PROCEDURE COST (US$)

US INDIA

Heart Surgery

Bone Marrow Transplant

Liver Transplant

Joint Replacements

Cosmetic Surgery

100,000

300,000

350,000

60,000

50,000

9,000

30,000

60,000

8,000

5,000

First Hospital in India to be Accredited by JCI

Apollo Hospitals, New Delhi

Apollo Chennai, Hyderabad, Bangalore, Ludhiana & Dhaka are also JCI Accredited

Accreditation – A Must

A Good Base To Build On

The next leap will come fromgeographical growth internationally,

backed by sound brand and product strategy

We Must Differentiate to Seek Greater Market Share

•Europeans’ wallets have shrunk as a result of the global economic crisis, pushing them to seek ways to lower their medical costs.

•That search has put Turkey on the map as a popular destination for those wanting lower-cost healthcare.

•One thing that also plays to Turkey’s favour is its high standards in medical care, as no less than 24 Hospitals and Clinics have JCI status, more than in almost every EU country.

• In 2007, the number of foreign patients in Turkey was 150,000. Last year, the number of foreigners treated in Turkey increased by 40% to 200,000.

•Turkey mostly receives patients from the Netherlands, UK, Belgium & France. There has also been an increase in Middle Eastern patients who have begun to prefer Turkey to Europe. Currently Turkey’s medical tourism market is worth around US$500 million, and it has the potential for many times that.

Turkey’s USP

U.S. Market

• The US Census Bureau estimates that by 2020, the population of seniors, currently 13 percent of the total US population, will grow to 17 percent. This graying of America will propel the demand for healthcare products. • For people with good insurance or other financial resources, the US offers the best care in the world. But, for the 47 million Americans who lack insurance or the ability to pay, world-class care is a distant dream.

• Patients with chronic illnesses represent the highest cost and fastest growing group in healthcare. The US healthcare system is not structured to manage them. Thus, a large number of Americans no longer have access to healthcare or are at grave financial risk if they get sick.

• Little likelihood that these problems will be remedied for decades.

U.S. – A Worsening Problem

300M US population consists of:

•47M uninsured•8M with >$75K income & 35-64 age range•250M insured (of which roughly 40M are underinsured)•150M employer provided benefits•70M covered by self-insured companies•80M covered by private insurance•20M direct purchase of private insurance•80M government provided program

Broadening the U.S. Market Reach

Current retail target market is less than 3%

Adding self-insured employers expands US market opportunity ten-fold

Growing U.S. Medical Tourism Market

• Estimated Medical Tourism 150,000 patients from U.S. in 2005

– Most traveling to Latin America and Mexico

• Estimated Growth – Possible increase to 500,000-700,000 patients per year

– US$33 Billion in potential cost savings

– Option increasingly available through employers and medical insurance carriers

Sources: Patients Beyond Borders: Everybody's Guide to Affordable, World-Class Medical Tourism by Josef Woodman, Healthy Travel Media, March 2007 Mapping the Market for Medical Travel by Tilman Ehrbeck, Ceani Guevara and Paul Mango, May 2008, McKinsey Quarterly.

U.S. Market Will Increase Dramatically if Insurance Companies Cover the Cost of Healthcare

WellPoint Serves Approximately 35 Million Medical Members

BC or BCBS licensed plans

NH

CT

ME

MA

VAKY

OHINIL

WI

MO

TX

COCA

NV

GA

UniCare >100K members

WellPoint Overview

One in nine Americans have coverage from WellPoint.

NY

•Health insurer WellPoint Inc. will dabble in medical tourism next year when it launches a pilot program that sends patients to India for some surgeries.

•WellPoint's pilot program will allow people to travel to hospitals in either Bangalore or New Delhi for procedures like joint replacement or upper and lower back fusion.

•WellPoint subsidiary Anthem Blue Cross and Blue Shield in Wisconsin will set up the medical care and take care of scheduling and travel service.

•The insurer will cover the travel and lodging costs for both the patient and a companion. It will offer the program only for people who receive insurance through Wisconsin-based Serigraph Inc., a self-insured printing company that employs about 700 people in the U.S. and does business in India, which was part of the reason WellPoint picked that country. 

Wellpoint Inc. USA – Press Release

Medical Tourism Landscape

• Anthem conducted an online survey regarding medical tourism

– 160 consumers and 149 employers responded

– 60 percent have traveled internationally

Respondents were willing to travel overseas for medically necessary or cosmetic procedures

Less than 30 percent with no incentives 57 percent if travel expenses (airfare, meals,

lodging) are covered for member 67 percent if travel expenses are covered for

member and one companion 73 percent if travel expenses are covered for

member and companion, plus a cash incentive

When would someone choose to leave the country for a medical procedure?

Proposed Incentives for Members

• Members will have no member cost share for surgery claims when provided through the Medical Tourism benefit

– No member copays

• Patient can select a travel companion to accompany them

• All travel arrangements and costs will be handled for the member and their selected companion

– Airfare, hotel, transfers, visas, etc.

Why Medical Tourism

New trend emerging– Rising medical costs– Increased cost sharing for insured members– Consumerism

Lack of competition among providers domestically (geographic monopolies)

New tools for an increasingly savvy consumer – Global marketplace– American corporations losing competitiveness with health

care cost trimming away profits

Guidelines for Identifying Procedures for Medical Tourism

(1) The procedure is elective in nature

(2) The patient is able to travel

(3) The surgery is commonly performed at the referral hospital with demonstrable quality outcomes

(4) Local follow-up care upon return home can be arranged, if needed

(5) The patient can safely travel within a reasonable time, post procedure

Member Eligibility

Member Eligibility for Medical Tourism Benefit:

– Covered member or adult dependent (18 years or older)

– Employer coverage must be primary coverage

– Member must be scheduled for an eligible Medical Tourism procedure (see separate list of eligible procedures)

– Member must be otherwise fit to travel, with no other complicating medical conditions

– Member must be interested in the Medical Tourism benefit (Medical Tourism must be an optional benefit)

Member Experience

The Member:

Talks to the surgeon to decide whether he or she is comfortable with the surgeon

Decides they want to travel internationally for surgery

Picks a date for the surgery

Travels with a companion of his or her choice, through travel arrangements made specifically for the member

Has surgery at an accredited facility with world-class surgeons

Apollo Research Findings

US Market

AMA Guidelines for Medical Travel(a) Medical care outside of the U.S. must be voluntary.

(b) Financial incentives to travel outside the U.S. for medical care should not inappropriately limit the diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or referral options.

(c) Patients should only be referred for medical care to institutions that have been accredited by recognized international accrediting bodies (e.g. Joint Commission International-JCI).

(d) Prior to travel, local follow-up care should be coordinated and financing should be arranged to ensure continuity of care when patients return from medical care outside the US.

(e) Coverage for travel outside the U.S. for medical care must include the costs of necessary follow-up care upon return to the U.S.

(f) Patients should be informed of their rights and legal recourse prior to agreeing to travel outside the U.S. for medical care.

(g) Access to physician licensing and outcome data, as well as facility accreditation and outcomes data, should be arranged for patients seeking medical care outside the U.S.

(h) The transfer of patient medical records to and from facilities outside the U.S. should be consistent with HIPAA guidelines.

(i) Patients choosing to travel outside the U.S. for medical care should be provided with information about the potential risks of combining surgical procedures with long flights and vacation activities.

Challenges and Perceptions – U.S. Patients

Survey Results - Top Concerns

0 10 20 30 40 50

Cleanliness

Country Location

Safety

Cost

Personal Referral

Experimental Care

Hospital Reputation

Quality of Care

Percent

Commonly Sought Procedures – U.S.

General / Cosmetic surgeries and Cardiology account for more than 60% of the procedures

Focus Value Ratings

Cardiac

Bariatric

Orthopedic

Transplant

Cosmetic

Fertility

Cost savings may not be sufficient to cover travel costs, alreadya well developed market in Latin America, does not correspondwith hospital brand image for complex procedures.

Small market size. South Africa has a significant hold on this Segment of procedures.

Large market size, however this procedure is often covered byhealth insurance. For those without health insurance they may choose to delay or avoid treatment rather than pay out of pocket.

Small market size. This is frequently covered by health insurancefurther diminishing the size of the market.

While the general market is large, this procedure is often covered by health insurance. However, this is currently an area ofexcellence for Providers meriting further investment.

Large and growing market. Frequently not covered by health insurance. Procedure required by individuals of all income levels.Motivation includes cosmetic and health reasons.

Type of Procedure Median US CostCombined Travel &

Treatment CostSavings

Hip Replacement / Resurfacing $50,000 $9,000 - $14,000 $41,000 - $36,000

Knee Replacement $45,000 $8,000 - $13,000 $37,000 - 32,000

CABG (heart bypass) $100,000 $9,000 - $14,000 $91,000- $86,000

Heart Valve Replacement $125,000 $9,500 - $15,000 $115,500 - $110,000

Heart Pacemaker/Defibrillator $60,000 $6,000 - $11,000 $54,000 - $49,000

PTCA (Angioplasty) with Stent $70,000 $6,000 - $12,500 $66,000- $67,500

Spinal Fusion $75,000 $7,000 - $13,000 $68,000 - $62,000

Gastric Bypass $45,000 $10,500 - $15,000 $34,500 - $30,000

Laparoscopic Surgeries (Gall Bladder, Hysterectomy, etc.)

$20,000 - 60,000 $3,500 - $11,000 $56,500 - $9,000

Source: IndUSHealth;; Procedures and Pricing; 2008.

MessagingCost Savings- same quality, but lower costs

Post-operative Care

• Post surgery care is a major concern for most overseas patients.

• Patients, who have returned to their home country, have expressed concerns over the ability to obtain prescribed medication or medical care, should there be complications after the surgery.

• Medical institutions seeking to attract foreign patients should consider working with local hospitals/associations for referrals and offering complete care for the patient after they have returned to their home country.

Overall: Thailand, Singapore and India are most advanced in medical tourism ...

Thailand Singapore India Malaysia Philippines

No. of medical tourists ~ 660 K2 ~450 K ~300 K ~300 K ~100 to 200 K (2006)1

Annual growth • 12%3 • ~20% • ~25% • 28% • ~30% (from

previous year)

Revenues from medical tourists 750 Mn4 425 Mn 440 Mn 54 Mn 125 Mn (2006 US$)1

Revenues from • 20-40% • 30-50% • 10-15% • ~5-30% • <5%6 medical tourists

(%)

No. of hospitals • 3 • 11 • 8 • 0 • 2 accredited by

JCI

Recognition • “Top 10 international • “Best medical/ • Relatively new player HC destinations” wellness tourism in medical tourism

- News Week destination” • Lacks international - Travel Weekly recognition (e.g. no

2007 profile in “Patients without Borders”)

... with differentiated positionings Based on relative cost, quality, service, physical infrastructure and types of specialties

Thailand Singapore India Malaysia Philippines

Positioning Good quality High end / High end care No clear Low-cost quality elective & complex at the lowest positioning provider for tertiary care quality acute price overseas with friendly care Filipinos and service Micronesia

Relative

Treatment price

Quality of medical care

Service

Physical Infrastructure

Focus Wellness, Quaternary Tertiary Elective Wellness Elective, Tertiary Tertiary Quaternary Tertiary Elective ( “routine”1 ) (“routine”) Tertiary

Poor Excellent

Key Strategic Considerations For Turkey, India & Asia

Medical Travel is a promising new industry in India & Asia, offering prospects for hospitals to

augment patient growth.

It is with a clear view of the addressable market potential, internal strengths & limitations, as well

as the level of external competition, that healthcare providers & facilitators may best move forward, to

realize this potential.

To make India the

‘Global Healthcare Destination’

Our Goal

Thank You