OVER THE PAST two years, medical tourism has witnessed exponential growth, facilitated by the dissolution of travel barriers, the spread of internet usage, and an aging but increasingly affluent population in the region.
Leveraging on these trends, the Malaysia Healthcare Travel Council (MHTC) – the government body responsible for championing the country’s medical tourism sector – had initially planned on making 2020 the year Malaysia cements its status as a global healthcare travel destination.
The pandemic has, however halted these plans indefinitely.
Penang has been the big player in this sector, and was serving as much as 61% of all medical tourists in Malaysia. Although the sector’s contribution to the state’s GDP may be small, 0.5-0.6% or RM420mil in 2016,1 the revenue it generated within society in supporting services such as transportation, accommodation, pharmaceuticals and leisure activities by patients and caregivers is substantial.
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Medical tourists to Malaysia are largely from Indonesia. In Penang they account for 97% of all health tourists. Although Malaysia’s central location in the region is a factor, distance is not an overriding determinant. Singapore, our closest neighbour geographically, contribute only 0.3% of health tourists in Penang. In fact, Malaysia’s popularity among Indonesians has more to do with credibility.
The pharmaceutical industry in Indonesia suffers from poor consumer trust owing to a high circulation of fake drugs, which is estimated to make up 15-20% of the total market.2 Counterfeit drugs are extremely hard to detect, but given their high prevalence in the country, it can be deduced that the population may want to avoid the risk altogether by going abroad for medical attention instead. For many of its citizens, Indonesia’s public healthcare is a last resort.
The fact that Malaysia and Indonesia have similar cultures, foods, languages and airline links is a bonus; and a very attractive one at that. Cultural and linguistic closeness reduce the likelihood of miscommunication; and for Muslim patients, the widespread availability of halal food in Malaysia significantly lowers the hassle of receiving treatment overseas. Malaysia is, in that sense, a home away from home.
But with the coming of Covid-19, border closures have prevented international patients from coming in. At the same time, Penang Centre of Medical Tourism (PMED) notes that, “local patients are also staying away from hospitals for non-urgent procedures due to the fear of catching Covid-19 [while at the hospital].” To be sure, it is a struggle for the healthcare sector; but so far, no PMED member hospital has laid off their staff, and that is no small triumph.
The pandemic has introduced a new set of trends. Lower disposable income, significant shifts in health tourists’ behaviour and preferences, and industry transformation are poised to permanently change the landscape of Penang’s medical tourism.
Decisions over where to receive medical treatment from will be strongly affected by how clean and safe a country is as a whole.
Consumers will definitely be more cost-conscious from now on; for example, 72% of Indonesians have experienced a drop in household income, while 53% have reported being less able to make ends meet.3 Many are spending more time researching cheaper alternatives and may also postpone treatment for non-pressing issues.
However, given that health services, unlike most consumer goods, are essential and sometimes even urgent, a negative income shock may not dramatically decrease the demand for them, if compared to leisure tourism. According to PMED, “there is still pent up demand from medical tourists to come to Penang for treatment. In fact, we expect a resurgence in patients once the borders are reopened.” Similarly, MHTC has been receiving a high volume of enquiries from international patients who require treatment from Malaysian hospitals.
Telemedicine Rises in Popularity
As countries alternately force, coax and beg their populations to stay home, the first half of 2020 saw a surge in the downloading of various wellness applications. The use of telemedicine for physical health also grew – Indonesian user growth for this segment is a shocking 67%. But most importantly, this indicates that telemedicine is here to stay. Sixty-six percent of Indonesian users intend to continue using it even after the pandemic is over.4
Older groups who had been unfamiliar with the internet before the pandemic, are now more willing to use it for gathering information. Thus it becomes even more important that healthcare providers maintain visibility by keeping their websites informative, updated and easily accessible. Once travel is possible again, those who are most salient on that front will gain an edge.
Telemedicine is gaining traction because medical tourists want to avoid travel if possible. Travel, to them, is a need and not a want, especially in a time when flying is seen as a risky activity. Almost 80% of Indonesians are worried about travelling by plane and using public transportation.5 They appear to prefer consulting a doctor for treatment and follow-ups from the comfort of their homes than travel, presumably if quality is not compromised.
Previously shielded by a growing stream of Indonesian patients, Malaysia’s medical industry never saw the need to push for remote medical services. Nonetheless, there is no greater incentive to adopt telemedicine technologies than the fact that competitors are already offering them to customers who are tech-ready and who are seeking value-for-money options.
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Consumers are displaying an increased preference for lowtouch activities, trusted brands, and a decreased willingness to jump on long-haul flights.6 Decisions over where to receive medical treatment from will be strongly affected by how clean and safe a country is as a whole. Ultimately, international patients will consider the destination country’s Covid-19 infection rates, and how the government there has been responding to the pandemic so far. Are sanitisation procedures in place? And not merely those for hospitals, but also for public transport, eateries, grocery stores, markets, and accommodations?
These considerations are suggestive of two things. Health providers must not only carry out strict hygiene procedures, but to also advertise that fact. Furthermore, it is not enough that they are seen doing it; supporting services should also maintain the same standards of hygiene.
PMED observes that the “timeline for recovery is dependent on borders reopening, [and] airlinks resuming.” The general expectation is that the medical tourism sector will take a year to get back on its feet. Once fully recovered, it is a given that the sector will not assume its pre-pandemic form; and in many ways, this is a good thing.
Greater consumer awareness of alternatives typically fosters healthy competition that will keep the sector innovative. Additionally, better hygiene practices and telemedicine options are changes that can improve the patients’ general experience.
Granted, all plans to deliver stellar healthcare are frozen for the moment. But that does not mean that competition is absent. How Malaysian healthcare providers and bodies such as MHTC engage international patients right now will determine the country’s market share and the sector’s growth trajectory in the future.
2020 may be a year everyone wants to wipe from memory, but for Malaysia’s medical tourism, now is a good time for the sector to enhance its long-held reputation of trustworthiness, and to strengthen existing customer relations and build new ones.
Jo-yee is a research analyst at Penang Institute whose interests range from development issues to behavioural economics. Her latest goal is to bake the perfect sourdough loaf.