Medigo has shut down their medical travel platform

In recent years, we’ve seen the rapid growth of online facilitated medical travel portals where patients can research their options for medical tourism, explore destinations and providers, and enquire about treatment. Angel investors and equity firms have invested millions of dollars in seed funding in these portals. But when looking for return on investment, don’t underestimate the time, marketing investment and customer service it takes to get potential patients to cross the line and make a booking.

One of the first medical travel portal entrants was indeed LaingBuisson’s own Treatment Abroad, launched seventeen years ago, followed by a site focussing specifically on the needs of infertile individuals, Fertility Treatment Abroad . In the USA, one of the longest surviving sites is the similarly structured PlacidWay. These sites continue to attract large numbers of visitors and to generate enquiries for their hospital and clinic clients. Their business model has endured the changes that have taken place in the market as they function on a straightforward advertising model unlike more recent market entrants who are reliant on an ever expanding team of customer service personnel.

Let’s create the Booking.com of medical travel

As the adoption of online purchasing grew, some believed that it was only a matter of time before healthcare went in the same direction as consumer goods and services – that patients would go online, research an operation or treatment and book and pay for an operation abroad online in the same way that they might book a hotel or holiday abroad. But healthcare is complicated and the decision to purchase healthcare is very different from planning a vacation or a business trip.

One of the best funded start-ups in the sector was Medigo. Launched in Berlin in 2014, Medigo listed over 200 clinics in 12 different countries at launch, with the free-to-use platform available in four languages. Initial funding of €1.9 million seed funding from Atlantic Labs and angel investors was followed by €5m from the California-based equity firm Accel Partners. By 2016, it had raised €10.75m in funding for launch and expansion in the US, UK, Australia, China, Asia and the UAE. In its first two years, the operators claimed to have helped 20,000 patients from 178 countries use a clinic or hospital abroad; that worked out at an investor cost of around €5,000 a customer.

By 2019, the numbers had climbed to 120,000 customers from 220 countries treated in a thousand hospitals and clinics in 36 countries. Medigo was running offices in Berlin, Singapore, Dubai, USA and the UK. It also launched a major illness treatment insurance product, “GLOBALCOVER”, to cover cancer treatment, neurosurgery, heart surgery and organ transplants at hospitals worldwide.

However, in 2020, Medigo decided to shut down their medical travel platform and focus solely on business services. It also ceased to offer its major illness treatment insurance, which had not gained traction. It now focuses solely on Third Party Administration (TPA) services.

Why did it fail?

This is my view. It may not be the “official answer” you might get from Medigo.

Quite simply, the business model didn’t work in medical travel. As the service developed, the company found that the protracted decision time and the extent of communication between Medigo and the patient needed to secure a booking required an extensive, multilingual customer service team. Patients took a long time to decide and often dropped out during the process. It’s the same issue faced by many international hospitals and clinics. Lots of enquiries and expressions of interest but it takes a great deal of effort to get the customer across the line. Managing the patient flow once they are booked in is the easy part. Getting to that point requires marketing investment, costly staff and extensive resources.

Ultimately, investors want a return on investment. A typical spend on treatment by a medical tourist in Europe might be €3,000 to €5,000. If as the portal operator, you’re taking a percentage of that spend, let’s say 10% to 15%, that doesn’t leave much to cover the staff and resources that you have expended in converting an enquiry into a booking and delivering a profit.

Money continues to be invested

Nevertheless, the concept of online booking for medical travel continues to be pursued elsewhere. Health care tech start-ups are mushrooming in India. Credihealth provides comparisons between doctors, hospitals and treatment packages. With launch funding of US$1.5 million from Tolaram Inc, it is looking to raise another US$20 million. Bangalore-based Practo raised US$4m in 2012 and has since closed six rounds, most recently US$32m Series D in August.

Launched in 2015 in Germany, Qunomedical, raised US$2 million from Project A Ventures, 500 Startups and Kima Ventures. The company claims to handle over 4,000 patients per month and partners with internationally certified clinics in 25 countries.

New York based VoyagerMed raised US$200,000 and an additional undisclosed amount from StartUp Health to help launch the corporate buyer version of its successful on-line marketplace for individual medical tourism showcasing US doctors.

An uncertain future

The demise of Medigo’s operation as a medical travel portal, despite significant funding, will raise concerns for any business or investor aiming to emulate their model. Covid-19 may well drive growth in medical travel due to the pent-up demand for treatment that has resulted from domestic hospital resources being diverted to treat Covid-19 patients. We’ve seen a massive move into telehealth and telemedicine as a result of Covid-19. Whether this will be reflected in patient willingness to adopt online booking for medical travel remains to be seen.