Picture credit: Blake Patterson, via Flickr
The COVID-19 pandemic has catapulted healthcare to the forefront of public interest. Yet healthcare institutions are under immense financial strain and in this blogpost Ben Hunter draws attention to the loss of income from international patients. He argues this has laid bare the weaknesses of a global market model in healthcare and encourages us to press for decommodified and locally driven alternatives.
The global healthcare economy
Contemporary healthcare institutions are increasingly immersed in multiple, overlapping global markets for products and services. There are intricate international systems for attracting investment, recruiting workers, and procuring pharmaceuticals and other health products. COVID-19, and associated policy responses, have placed strain on many of these systems, driving desperate struggles to obtain reagents, ventilators and personal protective equipment, and incentivising questionable strategies for the wealthiest agencies to ensure they come out on top.
One area attracting relatively little attention is the revenue pressure being felt by healthcare providers as a result of disruption to global markets for patients. Cross-border travel for accessing healthcare (often referred to loosely as ‘medical tourism’) is a major feature of healthcare in many countries, and (pre-COVID-19) was estimated to be a global market worth USD 50 billion. Much of this commercial activity is concentrated in particular countries, cities and hospitals, in middle-income countries like Malaysia, Thailand, Mexico, India and Turkey, and in some high-income countries such as South Korea, Singapore and the USA. It offers a revenue stream that can boost profits and excite investors; and has been seen as a way for public hospitals in the UK to ameliorate the effects of recent government funding squeezes.
A business model in crisis
Recent travel restrictions have, however, plunged the medical tourism industry into crisis. Hospitals reliant on income from international users are confronted with the failure of their business model, as are the brokerage agencies and accommodation providers that emerged to serve them. The CEO of Bangkok’s renowned Bumrungrad Hospital recently described how the 50% of its users who come from overseas have ‘disappeared’. Meanwhile reports from India suggest some hospitals are experiencing revenue losses of up to 90% as the effects of international travel restrictions are exacerbated by reduced domestic demand for certain services; the cost of a six-month interruption to India’s medical tourism industry has been estimated at USD 2.5 billion.
Faced with considerable financial losses, healthcare industries are seeking government subsidies to ensure viability in the short-term. In India there have been requests from industry representatives for public subsidies, while the UK government’s purchasing of private sector capacity has been described as a bailout for the country’s ailing private sector. Governments in countries with fewer COVID-19 cases are now looking to stimulate medical tourism as part of a wider economic push to revive inward tourism, even proposing to convert under-used pandemic facilities into hospitals for medical tourists. Industry analysts are advocating revised business strategies such as focusing attention on people in neighbouring countries, and using transnational telemedicine to tap into newfound familiarity and comfort with virtual interactions.
In the meantime, the failure of the global market model in healthcare is having profound human costs. People who would have travelled for healthcare unavailable in their home country – in many cases for life-threatening diseases – are facing significant delays to treatment with grave consequences. Wealthier sections of society are being confronted with under-resourced hospitals in their home countries – going abroad to circumvent inadequate domestic healthcare facilities is no longer the option it was three months ago.
Healthcare at a crossroads
The COVID-19 pandemic is forcing us to re-assess what we value in society. In settings where healthcare is chronically under-funded, and where opportunities to travel abroad for care are now diminished, there may be real impetus for governments to improve the state of domestic healthcare. Countries with advanced healthcare systems face several pertinent questions for the future: What is the purpose of their healthcare institutions? Whose interests should they serve and to whom should they be accountable? How should they finance their activities?
It is becoming more and more apparent that healthcare institutions must be extricated from the economic strategies and global market models within which they have become entangled. Yet in a guidance note published last week, two World Bank economists proposed greater roles for foreign investors in healthcare institutions, on the basis that ‘supporting greater foreign entry in all health-related services would help countries build resilience to future health crises by releasing pressure on domestic health systems and service providers’. COVID-19 has laid bare the flaws in these kinds of claims, as hospitals serving international capital markets side-step social responsibilities and demand public subsidies. There is instead a need for government leadership, increased domestic funding and a decommodification of healthcare, through pooled financing mechanisms such as taxation. It may seem a tall order given the looming global recession, but it is a decision that has strategic political benefits for those who take it. A new era for healthcare beckons: one of deepened marketisation, financialisation and inequalities; or one of equitable universalisation for a vital public resource.