MKT632 Unit 4 Case Study – Medical Tourism

Dubai Medical Tourism – A Case Study

Introduction

To enhance the learning experience, we are providing this Case Study. The Case Study provides a real-world description of an existing healthcare innovation opportunity. The Case Study examines whether a new enhancement to an existing Medical Tourism operation in Dubai, United Arab Emirates is worth implementing.

Medical Tourism is a term that describes consumers “patients seeking a more affordable health-care outside their own countries” (Nakra, 2011, p. 23). Patients travel to receive medical treatment that they cannot get or want in their home countries. Many times patients are seeking a lower cost alternative, premier services, or privacy.
This Case Study provides background information, comparisons with like operations outside of Dubai, and the reasoning behind Dubai’s emphasis on a quality, innovative experience. The Case Study provides foundational information and serves as a prerequisite for the Innovation course.

Background

Dubai is one of one of seven Emirates (Abu Dhabi, Sharjah, Ajman, Umm Al-Quwain, and Fujairah, and Ras Al Khaimah), that make up the United Arab Emirates (UAE). The acknowledged epicenter of wealth and innovation in the UAE, Dubai is strategically located between the East and West. This favorable geographic position has become the nexus of an ambitious vision by Vice President, Prime Minister and Ruler of Dubai, His Highness (H.H) Sheikh Mohammed bin Rashid Al Maktoum. Leveraging the vision of his father, Sheikh Rashid, Sheikh Mohammed envisioned what could best be described as a “develop for survival” approach to replace the country’s oil revenues that are estimated to drop significantly over the next 10 – 30 years. Central to Sheikh Mohammed’s strategic vision is for Dubai to become the international communities leading financial services provider, the world’s largest international transportation and redistribution hub, and ultimately the globe’s top medical tourism (MT) destination spot. In April 2014, Sheikh Mohammed stated four objectives that MT should accomplish:
1. To be the fastest growing Medical Tourism Destination globally
2. To be rated the Top Medical Tourism Destination, in the region
3. To develop a Healthcare industry to compete with the best in the world
4. To contribute to the Economic Development of the Emirate of Dubai (Dubai Health Authority, 2015)
The number of medical tourists expected to travel to Dubai will easily reach half a million in 2015, nearly doubling the figure achieved in the first six months, according to a government official. The forecast looks at tourists staying in 2,900 health care facilities. Dubai attracted 260,000 medical tourists in the first half of 2015, up 12 per cent from the same period a year ago, and generated 1 billion AED in revenue during the period. The largest percentage of medical tourists originate from Asian which accounts for 33 per cent of the total, followed by visitors from Europe with 27 per cent, and 23% from GCC (Gulf Cooperation Council) members and other Arab countries. Dubai aims to grow the number of medical tourists by around 12 per cent annually to reach “more than 500,000” and generate Dh2.6 billion in revenue by 2020. Dubai had set a target last year to welcome 500,000 medical tourists by 2020, but it will now exceed it by 12-13 per cent. The emirate aims to achieve its 2020 target by continuing to promote Dubai as a medical tourism destination to markets like the GCC, Africa, Asia and the UK, and offer medical tourism packages. For this case study, we will focus only on a segment of the Medical Tourism industry,

Medical Tourism (MT)

Much like Costa Rica and Thailand, Dubai has launched an aggressive effort to improve the quality, affordability, and timeliness of care in both the government and private healthcare sectors. Central to the medical industry transformation and reform are government’s establishment of the Dubai Health Authority (DHA) and the Dubai Health City Authority (DHCA). The government chartered the DHA and DHCA to oversee and develop new initiatives and programs such as:
1) Unification of healthcare policies, improving access to quality and affordable care while reducing the reliance on out-of-country treatment,
2) Unification of private and public sectors,
2) Development of a premier medical academic institution,
3) Substantial investment in modernizing hospitals,
4) Establishment of mandatory health insurance, and
5) the adoption of specialty clinics based on the boutique or concierge business models that attract a spectrum of complimentary market segments such as pharmaceutical manufacturers and pharmacies, research laboratories, wellness clinics, etc.
Further, the Dubai’s specialty clinics draw regional clients from the (GCC) members, seeking cardiac, spinal, dental, and plastic surgery procedures (Detrie, 2009). In sum, the efforts to date have Dubai on the cusp of emerging as one of the international community’s top MT destinations.
MT has become a new tourist niche (Horowitz, Rosensweig, & Jones, 2007) representing 2 percent of the world’s tourism spending and 4 percent of the hospital admissions in the world (2012 statistics). The Industry is a $79 billion business (Chou, Kiser & Rodriguez, 2012) with 20 million medical tourists (MT). It has a projected 20 percent annual growth rate (Horowitz & Rosensweig, 2007). By outsourcing medical services to less developed countries, the term “medical tourism” has become an acceptable alternative to high priced medical services in well-developed countries (P. Carrurth & Carrruth, 2010). By 2017, approximately 23 million Americans will travel abroad for such services.
Rather than just a business, it has become a phenomenon and it is growing at over 20 percent year over year. Marketplace forces, such globalization, and the reorganization of public and private health systems, drive the phenomenon that occurs outside of the view and control of the organized healthcare system (Freire, 2012, p. 41). Medical tourism presents important concerns and continuing challenges as well as potential opportunities (Freire, 2012, p. 41). This trend will have an increasing impact on the healthcare landscape in industrialized and developing countries around the world (Freire, 2012, p. 41). Unlike Health Tourism (HT) which focuses on individual “well-being” (thermal baths, thalassotherapy and stress reduction), Medical Tourism (MT) focuses on the person who either plans the medical or surgical procedure alone or with his or her regular doctor. In contrast, HT services are procedures that a person could receive from a spa treatment.

One reason for the increase in MT is the high cost of medical services (contrast a $50,000 knee replacement surgery in the US with a cost of $10,000 in Costa Rica) (Koster, 2009). Another driver of MT is the lack of service quality and overall services expectation (e.g. sharing a sterile hospital room with stranger). For example, some individuals seek privacy while others seek better services. Finally, others want to enjoy their hospital stay in exotic locations and in luxurious surroundings (P. Carruth & Carruth, 2010, p. 136). An example is the MT business model employed in Dubai, the MT emphasizes the “vacation package” approach. A member in a family of four (husband, wife and two children) has scheduled a hip replacement procedure. They have purchased a package deal that includes air travel, hotel accommodations in a high-end luxury establishment (meals included), tickets to theme parks and museums, health spas and gym, etc. This essentially provides the patient time to recover while meeting the family’s need for entertainment and relaxation. (For a better understanding of MT, check the resources of this website – http://www.medicaltourismassociation.com).

With healthcare costs increasing, a comparison of spending for selected procedures demonstrates that costs in the US far exceed those in other countries for doctors to perform relatively common procedures. Table 1, Medical Procedures Cost Comparisons, lists some cost comparisons that do not necessarily include airfare, lodging, food, and other expenses. The tendency of MT is to quote a complete package, rather than just the cost of the procedure.

Procedure

Performed in US

Performed outside of US

Heart bypass

$ 144 K (2010 dollars)

Thailand – $ 24 K
India – $ 8.5 K

Lap Band surgery

$ 30 K (2010 dollars)

Jordan – $ 5 K

Dental Treatments

$1000 to $500
($2012 dollars)

Costa Rica, Mexico, India, Hungary, Tunisia, Thailand
$250 – $ 125

Hip/Knee Operations

$43 K
$40 K

India, Malaysia – $11 K
Singapore, Thailand – $12 K

Hysterectomy

$20 K

India, Malaysia – $2.5 K
Singapore, Thailand – $3.5 K

Table 1. Medical Procedures Cost Comparisons (Adapted from P. Carruth & Carruth, 2010, p. 137; Freire, 2012, p. 50)
There is a compelling need for all parties involved in healthcare to become familiar with medical tourism and to understand the economic, social, political, and medical forces that are driving and shaping this phenomenon (Horowitz, Rosensweig, & Jones, 2007).
One concern has been the quality and experience of hospital personnel. To address this issue, a subsidiary of the Joint Commission International now certifies facilities in over 24 countries (P. Carruth & Carruth, 2007, p. 138), including those countries with extensive MT facilities. The Joint Commission is the best-recognized quality standards certification organization in the medical services sector. Patient Safety is also an issue; to address this the MTA, has established its own quality project, the Quality of Care Project, which evaluates medical facilities (hospitals) world-wide (P. Carruth & Carruth, 2012). In addition, Medical Tourism facilities must operate under a set of strict guidelines including implementing best practices, conducting business with integrity and on mission, and developing a dedicated and energetic team of administrators, support staff, nurses and physician leaders with excellent leadership skills (Todd, 2015). To ensure the highest quality, the DHA is planning to rank all medical facilities by 2017 (Sahoo, 2015).
One benefit that Medical Tourism providers have offered are luxurious facilities, improved levels of service quality and a better overall experience than traditional providers of healthcare have offered in the past. Research conducted by Chou, Kiser, and Rodriguez (2012), demonstrated that not only did levels of expectation increase with medical tourism, but the experience greatly influenced levels of satisfaction that measure the differences between expectations and perceptions of service quality performance. These researchers found that a person’s expectation of performance greatly affected their evaluation service satisfaction. This means that the person who expected more from the experience was more satisfied (Chou, Kiser, & Rodriguez, 2012). This expectation of confirmation is a relatively new theory that seems to explain the overall outcome of medical tourism better than more traditional satisfaction theories. Many Medical Tourism providers have invested in five-star facilities, gourmet dining, and entertainment facilities for family members who are accompanying the patient undergoing a particular medical procedure. The opportunity abounds to offer these services as a package deal that includes meals, lodging, and airfare.
There is also a dark side to Medical Tourism, since it excludes patients who cannot afford to pay for the procedure they are requesting to be performed (Maung &Walsh, 2014). Although costs may run much lower than services performed in well-developed countries, those patients in less developed countries would still need a great deal of cash to be able to make use of the service. This is a side of Medical Tourism often not discussed nor even considered by those seeking such services.
To be successful in any country, leaders of the facilities (and government proponents) must have a “grasp of operating costs and how they used this data to fine tune pricing of their services, taking into account their integrated health delivery system, value proposition, preliminary target market identification, and the building blocks for their health tourism products” (Todd, 2015, p. 1).  For continued success, leadership must develop a high level of clinical integration, healthcare engineering and technology, and impressive physician credentials to bring to market a differentiated and unique medical tourism product (Todd, 2015, p. 1).
Given this information, the country of the United Arab Emirates, namely the city of Dubai, has decided to invest heavily in Medical Tourism, especially with the high-end customer/patient. Keep in mind that Dubai has the world’s largest airport, served by all major international airlines and a growing national airline, called the Emirates. Figure 2 emphasizes the growing dependence of Dubai on the services and travel (transit) sectors, as well as Medical Tourism. The DHA is working with the Department of Tourism and Marketing to “lock in” prices and working with the General Directorate of Residency and Foreigners Affairs to simplify the process for obtaining a visa (Saberi, 2014).
The competition, for these patients, in this unique market segment is fierce. These patients are the wealthiest individuals in their countries and hold an upper class standing. One approach to attract these patients is to highlight Dubai as a modern city with the latest technology and most

Figure 1: Recent photograph of Dubai, 2015.
experienced physicians using a brand destination strategy (Melodena, 2008). Another strategy is to link the entertainment attractions, five-star service, and Medical Tourism industry identifying Dubai as the “high-end” leader in this niche. A third strategy is to include the cost of rehabilitative services offering the same amenities.

Figure 2: Dubai Vision – Emphasis growing on Medical Tourism (Adapted from Dubai- A Star in the East: A case study in strategic destination branding, (Melodena, 2008).

Rehabilitative Services

Rehabilitative services vary with each surgical procedure. Rehabilitation requires additional days in the hospital or a medical facility. Table 1 provides some idea of the patient length of stay for various surgical procedures. These lengths of stay are quite variable depending upon such factors as age, health condition, severity of symptoms, etc.
Table 1: Various Surgical Procedures and Length of Stay for Rehabilitation

By including full rehabilitation services within the “package,” this added dimension is truly an innovative application. Although this is a standard offering, no country has offered the 5-star level of service excellence for these services nor can these countries match Dubai’s entertainment package. In fact, recuperation times will be less than competitors (a presumption) will, given the high level of service quality and frequent personal attention.
The fourth strategy is Dubai’s extensive IT, FreeZone and financial infrastructure which allows Dubai to promoting itself as an international financial and business base provides top level executives and those required to be involved in daily business transactions to still seek elective medical treatment and surgeries and still maintain business conductivity in one of the world’s major business hubs. This offers the degree of flexibility to hold key conferences, meetings, off sites, or other key business transactions while recovering or in a rehabilitation stage.

Summary

Expanding MT services meets the Vision 2020 goals for Innovation in Dubai. One such service potential offering is rehabilitative services. Given its experience and reputation to date, such a new venture has both promise and potential. The Dubai Healthcare Authority must decide whether to accept or reject such a proposal. Using the Breakthrough Innovations concepts and tools should provide sufficient information to accept or reject the project before conducting a full financial analysis.
Case Study Questions (Support your answers by citing current market data):
1. Based on the results of this component of the assignment as outlined in Module 4 requiring conversations with family, co workers and fellow students (see below):
A) provide these groups with information regarding Medical Tourism and as a result, B) capture immediate feedback of this new ‘knowledge’.
Then use the “Measures of Possible Brand Building Block” on page 93 of your text to reflect your findings.
2. Identify your target markets, the points of parity, points of difference, and develop a brand mantra for Dubai (see chapter 2 of your text).
3. To help you with items 1 and 2 above, create a Brand Association model for Dubai as outlined in Figure 2-2.
4. What communication strategies will be necessary to generate interest and sustain growth? Use tools in Chapters 6 & 7 to address this (remember, your identified target markets will dictate your choice of communication platforms as part of your content marketing decisions; use table 7-4 as a basic guide).
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G. McLaughlin, W. Kennedy, A Amacher, F, Voehl © 2016
1

Surgical ProcedureHospital StayRehabilitation
Arthroscopic Surgery of the Knee, Shoulder, and Hip6 days (average)5-7 days
Total Hip Replacement Surgery3-5 days3-5 days
Total Knee Replacement Surgery3-5 days3-5 days
Total Shoulder Replacement Surgery1 day2-3 weeks
Stress Factures (dependent upon type)2-3 days70-95 days
Spinal surgeries (lumbar, cervical, compression fractures, spinal fusion, spinal stenosis and more)3-20 days 5- 20+ days
Cardiac Rehabilitation
17 days average12 weeks