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Wellness Travel & Tourism

COVID-19 and Medical Tourism in the United States

Wellness Travel & Tourism

In 2017, more than 1.4 million Americans sought healthcare outside the country, up from 750,000 a decade before. Fast forward to 2019, and the number rose by more than 25 percent to 1.9 million. Millions of Americans keep traveling every year to access quality and timely healthcare at a fraction of a cost in the US. But as the pandemic dealt a blow to the travel industry, the number dwindled substantially, raising a lot of uncertainty about the future of health travel in the country.

In the last decade, millions of Americans traveled abroad to access less expensive healthcare. Countries such as Costa Rica, India, Malaysia, South Korea, and Mexico were medical travel hub spots for a lot of Americans, many of whom lack health insurance or have health insurance plans that do not cover certain conditions and procedures. Americans who were uninsured could readily access these services for less than half the cost in the US, plus fun getaways and the beautiful travel experience that these destinations offer.

For instance, a dental implant procedure, which costs about $2,500 in US hospitals can be done at less than half the price in Costa Rica. Also, total hip replacement surgery, which costs $33,162 in the US can be done at Malaysian hospitals with comparable quality standards at $5,400. 

This cost disparity, coupled with the comparable quality of healthcare in these countries and the long wait times to access healthcare services in the US, drove many Americans to these countries for medical care. US companies and organizations also invested in this model of healthcare, sending patients through direct contract programs to specialist centers and renowned hospitals in these countries for affordable care. According to Medical Tourism CEO Jonathan Edelheit, many companies reported saving more than $20 million in five years by sending their employees to these medical travel hubs for orthopedic and bariatric surgeries.

These destinations further enjoyed an upswing of medical travel from the US as they began to secure international accreditations and retain US-trained experts in various medical specialties, assuring international patients of the quality of their healthcare delivery. By 2017, more than 800 hospitals had been accredited by the Joint Commission, with the number growing by 20 percent yearly, expanding the market for outbound medical travel in the US.

However, in the wake of the coronavirus pandemic, inbound medical travel ceased as governments implemented travel restrictions and bans across the world. The global hospital workforce was overstretched, leading many healthcare providers to suspend elective surgeries and procedures - which are the drivers of health travel.

As a result, US hospitals recorded massive revenue losses, with a bleak outlook as the outbreak resurges across the country and governments reintroduce travel restrictions. Mayo Clinic, for example, estimates a revenue loss of over $900 million for this year, as it records fewer elective surgeries and procedures, which make up more than half of its revenue. The decline in elective procedures has also ebbed down income by almost $70 million for Grady Health, Atlanta, a major player in the health travel business.

International travel restrictions are not the only factors limiting medical travel in the wake of the pandemic; interstate travel bans have also limited domestic medical travel, which was soaring in the US before the pandemic.

Walmart was one of the employers pushing domestic medical travel in the US. The company encouraged some of its employees to access medical care in centers of excellence in other parts of the US, covering their medical costs and travel expenses. Through this direct contracting initiative, Walmart employees could access cardiac procedures, transplant surgeries, and hip replacements in other locations in the US.

According to the American Hospitals Association, the drastic drop in both international and domestic patient inflow has led to hospitals losing an estimated $50 billion a month.

The future, therefore, looks very complex for medical tourism in the United States. With the largest number of confirmed cases globally and the recent resurgence in parts of the country up to record highs, the US may be heading for a further decline in medical travel, and a challenging recovery afterward. And experts say the industry may not begin to recover until 2022.

Multiple factors will determine the future of the medical travel market in the country, both on the supply and demand angles. The future may be met with a demand-supply mismatch that may cause the industry to implode further.

On the supply side, the American Hospital Association released a report in May, describing the financial impacts of the pandemic on hospital systems. First, the pandemic has increased the operational costs of many hospitals. Treatment costs and costs of medical equipment soared during the pandemic as a result of both the high demand for the equipment and disruptions to the supply chains caused by the travel restrictions. 

According to the Kaiser Family Foundation, the cost of treating a COVID-19 patient could be as high as $20,000, and up to $90,000 for those that require ventilators. Also, hospitals in New York City reported paying four times the usual price for medical gloves and over 15 times the usual cost of face masks. According to the Society for Healthcare Organization Procurement Professionals (SHOPP), the costs of the items went up by more than ten tens since the pandemic began.

Some of these hospitals also incurred additional costs to address medical staff shortages and meet surge demand in the wake of the outbreak. Coupled with the financial losses from canceled elective procedures and treatments, these rising costs caused intense financial strain on many providers, many of whom are beginning to run into debt.

This financial burden may, no doubt,  impact negatively on medical travel recovery in the country.

Resumption of air and cruise travel and the persistence of travel restrictions will impact medical travel recovery in the US. With dropping household incomes and unemployment induced by the pandemic and the looming shortage of healthcare providers in the countries, more tourists will prefer to seek healthcare outside the country for their pent-up medical needs. Incidentally, these countries, including Latin American and Southeast Asian nations, have opened their borders to US tourists as a strategy to revive their tourism industry. However, the US is still closed to many countries from which medical tourists travel, including the European Schengen area, the UK, and Brazil.

These visa restrictions and travel bans may reduce consumer confidence in the US, potentially impeding recovery for the industry. Strategies to rein in further spread of the outbreak, foster international collaborations, and ramp up medical capacities to meet the pent-up medical demand of medical tourists may pave the way for the rejuvenation of US medical travel.

These strategies will rely on concerted efforts by all stakeholders in the medical travel business, including the airline industry and logistics companies. These pull-and-push factors will determine the growth of the industry going forward and its position in the post-pandemic era.

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