Medical tourism and retail clinics: disruptive innovations or opportunity?

The growth of retail clinics and medical tourism shows that patients are seeking more alternative means of care and at lower costs - a trend that may be an opportunity for providers to shift toward a model of consumer-driven care, researchers say.

According to the Deloitte Center for Health Solutions, last year more than 750,000 Americans left the country for less expensive medical treatments; this number is expected to grow to 6 million by 2010.

In addition, the number of retail clinics in operation has soared 220 percent, from 250 clinics in 2006 to more than 800 by the end of 2007.

The Deloitte Center's research series includes a body of reports centered on disruptive innovations such as medical tourism, retail clinics, disease management and retail pharmacies, which are creating a shift from conventional models of service delivery and payment to a consumer-centric system of care in which price, quality and service delivery are key.

"The emergence of disruptive healthcare innovations, such as medical tourism, retail clinics, medical homes, alternative medicines and cyber visits, present an industry paradigm with new players, new delivery models, new ways of partnering and new value propositions," said Paul Keckley, executive director of the Deloitte Center for Health Solutions. "Our research suggests that while traditional roles in the healthcare delivery system are being threatened by these innovations - creating initial worries for physicians, hospitals and allied health professionals - they may also provide new and rewarding opportunities"

Among the key findings on medical tourism from the reports:

• Outbound medical tourism currently represents $2.1 billion spent by Americans overseas for care and amounts to $15.9 billion in lost revenue for U.S. healthcare providers. Americans primarily seek this sort of care for elective surgical procedures.

• The number of outbound medical tourists is projected to rise to 15.75 million in 2017, representing a potential of $30.3 billion to $79.5 billion spent abroad by Americans. As a result, the potential lost revenue for U.S. healthcare providers could top $228.5 billion to $599.5 billion.

• Medical care in countries like India, Thailand and Singapore can cost as little as 10 percent of the cost of comparable U.S. care, often including airfare and a stay at a resort.

• In 2008, more than 400,000 non-U.S. residents will seek care in the United States, known as inbound medical tourism, and spend almost $5 billion for health services.

• Many leading U.S. academic medical centers and major health systems are already seizing the opportunity to capture the medical tourism market by leveraging their strong brands and collaborating with international providers.

As for retail clinics, the reports found that:

• Consumers are flocking to retail clinics not only for convenience, but also for the relative low price differences associated with visiting their primary care physicians for the same treatments. The cost of services provided by retail clinics range from $50 to $75, with the majority priced at $59, compared to a physician's office visit, which can cost from $55 to $250. Additionally, the cost for a retail clinic physical, at $25 to $49, can also result in savings compared to a physical at a physician's office that can cost anywhere from $50 to $200.

• The U.S. market for disease management services is projected to reach $30 billion by 2013, providing convergence opportunities for retail pharmacies to add disease management services to attract consumers to their stores for cross-selling opportunities, providing one-stop shopping for healthcare services.

• Retail clinics and pharmacies positioned for market success may also include pharmacy benefit management (PBM) services that could also attract significant market share, particularly for disease management services to treat chronic conditions.

"Hospitals, physicians and health plans will need to quickly adapt to the competition from non-traditional players and develop long-term strategies, such as M&A, alliances and partnerships, to capture market success," said Keckley.  "Those that factor in the unique attitudes and preferences of consumers as they make strategic decisions about partnering and developing new business models and care delivery networks will have a huge opportunity to win the consumer market."

Deloitte's new analysis expands on its "2008 Survey of Health Care Consumers," which identified several trends, including consumers' growing appetite for medical tourism, use of retail clinics, alternative therapies and tools and technology to self-navigate the healthcare system.

Do you think these trends are an opportunity for providers or disruptive innovations that threaten the healthcare delivery system? E-mail Associate Editor Molly Merrill at molly.merrill@medtechpublishing.com.