The economics of health and medical tourism

The old medical tourism was South to North. It was the sultans and the sheikhs who could afford trips to the Mayo Clinic and Harley Street. The new medical tourist is global: not just from poor countries to rich countries but South to South and North to South as well. Comparative advantage, rising incomes, rising expectations, the ageing population, long waits, budget flights, differences in provision, the opportunity to combine medical care with recreational tourism are all drivers in the globalization of medical services. This chapter concentrates on three particular advantages for the international patient: price, quality and product differentiation. Price can be lower and labour often cheaper even if technical equipment has to be bought at world prices. Quality is assured by certifying bodies like Joint Commission International (JCI) and by professional training in respected medical schools. Product differentiation can take the form of traditional Chinese medicine in Beijing or Ayurveda in India, but also experimental drugs and commercial transplants. The new middle classes benefit from a greater range of choices, not least in elective areas such as cosmetic surgery and dentistry. The poor do not benefit directly, although indirectly they may enjoy spillovers such as employment, tax-funded welfare and cross-subsidization of services for the home population. The chapter concludes that, suitably managed, medical tourism can stimulate a regional and even a national multiplier that delivers a plus-sum gain through economic growth.