World flies to India for cheap cure

Travelling far and wide for health care that is often better and certainly cheaper than at home, appeals to patients with complaints ranging from heart ailments to knee pain. Why is India leading in the globalisation of medical services? Q&A with Harvard Business School’s Tarun Khanna

What used to be rare is now commonplace: travelling abroad to receive medical treatment, and to a developing country at that. So-called medical tourism is on the rise for everything from cardiac care to plastic surgery to hip and knee replacements. As a recent Harvard Business School case study describes, the globalization of health care also provides a fascinating angle on globalization generally and is of great interest to corporate strategists.

“Apollo Hospitals-First-World Health Care at Emerging-Market Prices” explores how Prathap C Reddy, a cardiologist, opened India’s first forprofit hospital in Chennai in 1983. Today the Apollo Hospitals Group manages more than 30 hospitals and treats patients from many different countries, according to the case. Tarun Khanna, a Harvard Business School professor specializing in global strategy, co-authored the case with professor Felix Oberholzer-Gee and Carin-Isabel Knoop, executive director of the HBS Global Research Group. The medical services industry hasn’t been global historically but is becoming so now, says Khanna. There are several reasons that globalization can manifest itself in this industry:

Patients with resources can easily go where care is provided.

High quality care, state-ofthe-art facilities, and skilled doctors are available in many parts of the world, including in developing countries.

Auxiliary health-care providers such as nurses go where care is needed. Filipino nurses provide an example.

“From a strategic point of view you can move the output or the input,” explains Khanna. “Applying this idea to human health care sounds a bit crude, but the output is the patient, the input is the doctor. We used to move the input around, and make doctors go to new locations outside their country of origin. But in many instances it might be more efficient to move the patients to where the doctors are as long as we are not compromising the health care of the patients.”

Khanna recently sat down with HBS Working Knowledge to discuss the globalization of health care in the context of India and Apollo Hospitals.

Q: What led you to research and write this case?

A: I came across the company during some of my travels in South India. It was so unusual to find “first-world health care at emerging-market prices” as the case says. Often better care—by which I mean technologically first-rate care with far greater “customer service” and accessibility—is available in parts of India than in my neighborhood in Boston.

Felix Oberholzer-Gee, Carin-Isabel Knoop, and I decided to write the case just because health care is such a primal thing—it arouses a lot of emotions and insecurities. After all, it’s one’s life and health that one is dealing with. And the prospect of entrusting health care to a developing country had a pedagogical “shock value,” too.

The fact that the cost of living is so much lower in India means that the same service is possible at a fraction of the price elsewhere.

Q: The term “medical tourism” is fairly new, but how new is the phenomenon of going overseas for medical treatment?

A: When I was a college student in the United States I discovered that dental care was very expensive. Even back then, many of my international classmates essentially engaged in medical tourism—they would simply bundle up the care they needed, make a trip to their country of origin, and take care of it. India was certainly one of those countries I was aware of due to my own personal background.

We didn’t have a term for medical tourism, but in a sense it was all around us. It took a set of entrepreneurs to begin to make it happen. By the late 1990s, when I was teaching courses in global strategy, some of my Thai, Malaysian, and Singaporean students were perfectly aware of the term, because these countries of Southeast Asia already had very good tertiary-care hospitals.

Medical tourism usually refers to the idea of middleclass or wealthy individuals going abroad in search of effective, low-cost treatment. But there is another dimension of medical tourism that is not called medical tourism. Narayana Hrudayalaya, a heart hospital in India, treats indigent people from neighbouring countries — Pakistan, Bangladesh, Burma—who suffer from heart disease and can’t afford surgery. Treatment for them is free. The hospital is able to provide it because surgical methods are efficient enough that pro bono care doesn’t hurt the bottom line.

Q: Why is India gaining prominence for medical tourism?

A: India is encouragingly less “scary” now. I think a lot of entrusting medical care to different locations is about a psychological fear of the unknown. An important strategic challenge for developing-country hospitals is to reduce the psychological fear.

In India, the same depth of pool of engineering and mathematical talent for software, offshoring, and outsourcing is there for medicine, too. In the 1950s and ‘60s, the Indian government invested a lot in tertiary education. By now there is at least a small handful of medical institutes that are really first-rate, and the doctors they produce are extremely well trained.

Q: What are the recruiting challenges for staffing these hospitals with doctors?

A: In the case, Prathap C Reddy, the founder and chairman of Apollo Hospitals, says he spent a lot of time studying specialists almost like an executive search firm would, to identify their pleasure points and pain points in terms of building a successful practice in the West and potentially in India. He wanted to understand not just medical training and specialties but also family circumstances, since it is always a family decision to relocate.

In the past, Indian doctors left India so they could multiply their incomes. But now we’re seeing the reversal of that. India is booming so why leave, and by the way, patients can go there.

Q: How does growth in private hospitals affect public health care in India?

A: There is an assumption in the view often expressed in the media in India and Europe, for instance, that when private hospitals in India provide care to heart patients from England, the hospitals are somehow taking care away from poor people in India. The assumption seems to be that if medical tourism was banned, the doctors in question who were catering to wealthy patients would suddenly, as a practical matter, move to a village. It takes a different set of individuals, a different set of infrastructure circumstances to create that scenario.

My guess is that the bulk of India’s problem is primary health, and has nothing to do with tertiary care. And the primary health problem is not going to be addressed by a private hospital for the most part anyway.

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