Medical tourism

For a long time, international trade in services was seen as an outlier -- some thing that is rare and not quite comprehensible. That changed in the 1980's with the inclusion of services in the Uruguay Round of trade negotiations. Back then, I was also involved in one of the first looks at the specifics services trade by the non-disbanded Congressional Office of Technology Assessment. Our study, International Competition in Services: Banking, Building, Software, Know-How... looked at what we saw were four key tradable services. Medical services were not on the radar -- except for some wealthy foreigners coming to the US for specialized treatment.

Now, as a new case study from Harvard Business School outlines, trade in medical services (dubbed "medial tourism") is a big deal -- and the shoe is on the other foot. More and more Americans are seeking lower cost treatment abroad, especially in India. The case study looks specifically at the rise of Apollo Hospitals. But, as the overview discussion in HBS Working Knowledge — The Rise of Medical Tourism the phenomenon is more wide spread:

Patients with resources can easily go where care is provided. "Historically doctors moved from Africa and India to London and New York to provide care. Now we are basically flipping it around and saying, 'Why don't the patients move? It's not as difficult as it used to be.' "

It is growing and it is not just trade catering to patients from Western nations:

We will see solutions emerge that have nothing to do with the West and that specialize in particular kinds of care where the West may not even have much competence: tropical diseases in Southeast Asia and Africa, for instance. On the other hand, you might see very interesting links between particular companies, research institutes, and hospitals in different parts of the world—in the Middle East, Europe, the United States. My guess is that 3 or 4 prominent hospital companies will survive because the demand is so huge.

The growth of medical tourism highlights the changes in what is tradable. Medical services were once seen as one of the last remaining bedrocks of local economic development. The medical center replaced the factory as the main employer in many cities. But with greater push for telemedicine, the centralization of medical services is not as compelling as it once was. And improvements in transportation, not just information technology, are enabling the rise of medial tourism.

As the I-Cubed continues to evolve, look for more of these paradigm flipping strategies. They will pose a challenge not only to corporate strategy, but to our economic development strategies.