India medical tourism market: Worth $8 billion? The reality…

Will the Indian medical tourism market really be worth USD 8 billion by the year 2020? Where has this figure come from? And how did they come up with it?

The US based Medical Tourism Association provides a rich vein of misinformation when it comes to my pet topic of “the medical tourism numbers game”. This week, I received an email from a Rudy Dopico inviting me to attend an ” informative webcast” and learn how ” to expand your reach into the fastest growing economic region in the world”.

It was headlined: “8 Billion Market Growth in India”.

As we have seen in the past, one thing that the MTA is good at is hyping the medical tourism market, and broadcasting data that makes the medical tourism market sound like it’s the next  big thing. The backtracking on claims that the medical tourism market is worth $439 billion dollars provides the most recent example. Their leaders have been promoting “exponential growth” in medical tourism to destinations around the world for many years. But this medical tourism boom is yet to materialise. Many destinations have been disappointed.

I suppose, in a post-Trump world, where it’s becoming OK to spout “alternative facts”, we shouldn’t be surprised.

I don’t know Rudy Dopico but his LinkedIn profile tells me he’s a “Top-performing sales, marketing, and business development professional with proven ability to drive business expansion through aggressive sales initiatives”. It doesn’t mention anything about medical tourism in his background… which is probably why he writes a headline like “8 Billion Market Growth in India” without thinking what that means. 8 Billion is a big number… sales people like big numbers, except when it’s a sales target 🙂

So, I did some digging to see what this “8 billion” is about. 8 billion percent growth? 8 billion patients? 8 billion rupees? Where did it come from?

Where did the “8 billion” originate?

The number originates from Grant Thornton India’s National Managing Partner, Vishesh C Chandio, who said this “The Indian Medical Tourism market is expected to grow from its current size of USD 3 billion to USD 7-8 billion by 2020,” in India’s Economic Times. Now, we know from past history that the big consultancies can get it badly wrong when they are researching medical tourism. Remember the McKinsey analysis and Deloitte?

Ok… we have Grant Thornton India telling us that medical tourism to India is worth USD 3 billion today. But in the same whitepaper, we have Grant Thornton telling us that medical tourism globally is a USD 17 billion market and will reach USD 40 billion by 2020. Elsewhere Grant Thornton tells us that 200,000 tourists come to India annually for medical care, including complicated surgeries.

So, it’s saying that:

  • India currently has around 18% of the global medical tourism market.
  • It will have around 20% by 2020.
  • And that the average revenue per medical tourist is USD 15,000.

Given that the key driver for India is low cost, and that it’s major source markets are countries such as Bangladesh, Afghanistan and those in Africa, are these figures believable?

Also, bear in mind that the average revenue per occupied bed in Apollo hospitals (the largest Indian hospital group) is around USD 400 and the average length of stay is 4.17 days, thus creating an average revenue per inpatient stay of around USD 1,700.

So… what’s the real number?

The honest answer… no one knows. Probably a lot less than USD 3 billion now and USD 7-8 billion in 2020. To put the number in perspective, here are some numbers for international patient business for the top five Indian hospital groups:

  • Apollo – no figure stated, but let’s assume international patients account for 10% of revenue. So, around USD 75 million
  • Fortis – state that international patients account for 10% of revenue = USD 50.8m
  • Narayana Health – state that international patients account for 5% of revenue = USD   11m
  • Manipal Hospitals – no figure stated, but let’s assume international patients account for 10% of revenue. So, around USD 12 million
  • Max Healthcare – state that international patients account for = USD 6.2m

So for the top five hospital groups, international patient revenues total around USD 155 million. That works out at around USD 5 million of revenue for each inpatient bed within the major groups. And leaves another USD 2.845 billion of international business to  be delivered by India’s other hospitals.

How did Grant Thornton get to the USD 3 billion?

For the sake of argument, let’s assume that all of the other hospitals in India are as active in the international patient market as those within the top five hospital groups. (Ask yourself… is that a realistic assumption?)

  • There are around 600,000 hospital beds in India (public and private).
  •  Within the top five hospital groups, international patient revenue delivers on average around USD 5 million of revenue for each inpatient bed each year.
  • Multiply the 600,000 hospital beds by USD 5 million of revenue for each inpatient bed… and hey presto…you get…. around USD 3 billion for the value of India’s inbound medical tourism.

And that’s probably how Grant Thornton came up with the number… take the data you can get from the major hospital providers, then project it to represent the entire market.

I’ve asked Grant Thornton for some insight into how they created their numbers. I’m waiting for a response.

If you sign up for the upcoming MTA webcast, ask them what they think the real number is. Rudy will probably be happy to come up with a number for you. As long as it’s big…