Medical Tourism – more than just a holiday

Many countries are now actively seeking to build a vibrant medical tourism industry and this has significant insurance implications.

An example of the challenges and opportunities presented by medical tourism is South Korea.  Since 2009, the South Korean government has collaborated with the local insurance industry and Swiss Re to find solutions to meet the needs of medical tourists. It is expected that the total number of medical tourists venturing to South Korea will reach  250,000 within five years as a result, contrasted against 12,000 in 2009.

Medical tourism is the growing practice of people choosing to travel overseas to seek medical treatment.  The motivation behind this growing desire includes:

  • Access to the most advanced technology for treatment
  • Better quality of treatment
  • Reduced waiting time compared to having the treatment performed domestically
  • Lower cost of  treatment

The actual size of the global market is uncertain, Frost & Sullivan1) estimate that, as at the end of 2010, the medical tourism sector was worth USD78.5 billion and catered to over three million patients a year. With over 50 countries now recognising medical tourism as a national industry, it is clear that medical tourism is growing, with some estimates suggesting a growth rate of between 20-30 percent annually. As the US economy recovers, and with its healthcare reform moving forward, it is believed that this could serve as a prompt to increasing the number of US travelers seeking medical treatments outside the US.

So what may this mean for insurers in Asia?

Within Asia, medical tourism is an established industry with countries such as India, Malaysia, Thailand, Singapore, China (including Hong Kong) and South Korea prominent in offering a full suite of elective and specialised surgeries for overseas medical tourists.  The question for local insurers is whether medical malpractice exposure is also increasing in respect to the frequency and/or the severity of claims. Swiss Re suggests clients consider:

  • If an insured could be potentially linked to a US patient filing a malpractice claim within the US?
  • How active is the insured in soliciting patients directly in the US?
  • How often does the insured accept patients US medical-tourism firm referrals that operate within the US?

As medical tourism becomes more accepted as a viable alternative to domestic medical treatment, so too will the patient's expectation that if something goes wrong they will be protected adequately.

Currently in many Asian countries, medical malpractice insurance remains an optional cover for hospitals and doctors alike. Those that do purchase cover may find their policy ultimately does not fit their needs. This could be in respect to the cover provided, the deductibles applied or the policy limit of indemnity being insufficient to meet the overseas medical tourists' potential cost-of-care needs.

The challenge remains as to how the legal environments within Asia will evolve in response.  The level of litigiousness within these countries may begin to shift and potentially act as a catalyst for medical malpractice to become a compulsory cover for doctors and hospitals. This would not only provide international medical tourists with a greater comfort level when choosing a country to receive treatment, but also benefit the local population.

Swiss Re is advocating that the insurance industry discusses with governments the exposures that medical tourism can bring and recommend insurance solutions to best meet evolving needs. Swiss Re also advises clients to monitor changes in the legal landscape to ensure that evolving exposures are underwritten knowingly for expected claims and to enhance the data collection of medical malpractice policy information so as to thoroughly monitor and manage any trends in claims frequency and/or severity.

1) Frost & Sullivan: Malaysia's Medical Tourism Industry has Healthy Vitals, Frost & Sullivan, April 14, 2010

Published November 2011

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