Covid-19 Pandemic: scenario
The catastrophe and chaos and disorientation of the unexpected and deadly. Covid-19, a chastening experience for even the most developed of countries, especially those strangely tardy in acting on dire warnings – only last year the US and the UK had been ranked by Global Health Security Index as the most prepared for epidemics and pandemics, with South Korea far lower, ninth.
From its detection and China’s rapid response and alerts to the World Health Organization (WHO), Covid-19 has wreaked death and destruction and economic chaos throughout most countries of the world. And that includes those countries where tourism and travel are significant employment and revenue generators. With most countries closing their borders and restricting travel (air, sea, and land) to even their respective regions and cities, the damage, economic, employment, and financial, would be evident for an industry dependent on the movement and social interaction of people.
As it stands, at the global level there have been in excess of 5.5m cases of Covid-19, with over 350,000 fatalities, and still increasing. And of those cases, and cases which comprise the sample to be analyzed, Turkey has accounted for approximately 3%; India, a little over 2.4%; Mexico, just over 1%; Dominican Republic, almost 0.3%; and Thailand, 0.06%. And in all cases, these countries have had to impose strong health and safety protocols that would adversely affect the economy, employment, and their respective tourism sectors which contribute significantly to employment and the economy, and that extends to the medical sub-sector, increasingly important to many countries.
In its first issue of World Tourism Barometer for 2020 the United Nations World Tourism Organization (UNWTO) expressed cautious optimism for the global tourism industry. Its forecast for arrivals was between 3-4%, in contrast with the 3.8% of 2019, both years below the 10-year average of 5.1%, and the 5.6% of the previous year. The catastrophic impact of Covid-19 in the health, social, and economic life of countries would be reflected in the organization’s May issue. For the first quarter of 2020, with Covid-19 policies in place, by its calculations tourism arrivals had declined by 67 million, resulting in a loss in tourism revenues of an estimated US$ 80b. Asia accounted for the largest visitor decline for that quarter over its previous year, 35%, followed by Europe with 19%, and the Americas with 15% lower than its figure for the previous year.
In addition, the UNWTO paints grim scenarios for the tourism ecosystem for the current year. Under its three hypothetical scenarios sketched at the time, tourism arrivals are expected to decline in 2020 by between 58 and 78%, putting in jeopardy from 100 to 120 million of those directly employed in tourism, and resulting in a loss of tourism revenues of an amount in excess of US$ 910b.
All this comes in the context of economic ‘red flags’ from the International Monetary Fund (IMF) in its World Economic Outlook (WEO). Its Chief Economist only in January had forecasted world annual economic growth at 3.3% for 2020; a figure now drastically reduced, a vertiginous decline, and just a mere few months into the pandemic, to -3.0%, a situation far worse than the decline of -0.1% for the Great Financial Crisis (GFC). A foreboding scenario, with Chief Economist warning of the likelihood of a global recession approaching that of the Great Depression. Yet in the present scenario there are still some glimmers of hope and opportunity.
The impact of the pandemic has been devastating for many countries, and for a host of areas such as the Health Tourism market. Although some health treatments and priorities cannot be postponed and consumers search for less expensive medical treatment, a large segment of the medical tourism market is driven by the demand for cosmetic and elective surgery. Ergo, as a result of Covid-19, many trips to receive medical treatment have been cancelled and many more will be cancelled, or postponed until 2021. Assuming a successful containment of the pandemic, and consistent with a flattening of the Covid-19 curve, the Summer of 2020 will mark the onset of a new normal for medical tourism in both the demand and the supply countries.
The novel Covid-19 compelled governments to impose restrictions on citizens’ behavior, requiring locals and tourist alike to wear facemasks in public, to practice physical distancing, establishing curfews, and even imposing lockdowns on citizens and visitors alike. In addition, Covid-19 has resulted in temporary and permanent loss of employment and concomitant earnings, adding stress on assets, savings, and consumption, as a consequence forcing households and businesses alike to resort to seeking government assistance.
The pandemic has had a sudden, drastic, and dramatic impact on medical tourism. Income allocated to healthcare treatments and travel has had to be suddenly be reallocated to more urgent needs, even survival. Medical Tourism travel plans scheduled for the first six months of 2020 were cancelled, or have been postponed indefinitely.
Health tourism overview, a representative sample of countries
A quick overview of Turkey, India, Thailand, Mexico and the Dominican Republic will provide some insights into the economic importance of medical tourism, in terms of the number of travelers (see graph 1). Clearly, medical tourism is large, in 2019 alone, patients seeking medical services in the five countries of the sample, range from 362 thousand in the Dominican Republic to 3 million in India.
Medical tourism is a growing economic endeavor around the globe thanks to the ability to offer facilities and treatment comparable to that offered by top ranked medical institutions around the world in high-income countries, with up to 90% savings for treatment fees (including medical institution, inpatient treatment, and professional fees).
Estimated revenues from medical tourism (see Graph 2), range from US$ 543 million for the Dominican Republic to US$ 3.8 billion for Thailand in the sample countries. One implication is that Med Tourism, notwithstanding the severe crisis, does have solid growth potential.
Regardless of its size, or growth rate, it is evident that medical tourism in 2021 will be different from the paradigm we knew in 2019. Post-pandemic travelers seeking surgical procedures and other medical treatments, will, most assuredly, be more demanding, will seek more reassurance, more personal recommendations, and more information on the risk to health and safety.
Medical tourists’ search for high quality but price-competitive treatments will be accommodated by medical patronizing institutions accredited by the Joint Commission International (JCI). As of 2019, the number of accredited institutions is quite small in each of the sample-countries (see Graph 3). As a result of the pandemic, the number of JCI accredited institutions is expected to surge in all countries.
Regardless of its size, or growth rate, it is evident that medical tourism in 2021 will be different from the paradigm we knew in 2019. Post-pandemic travelers seeking surgical procedures and other medical treatments, will, most assuredly, be more demanding, will seek more reassurance, more personal recommendations, and more information on the risk to health and safety. Medical tourists’ search for high quality but price-competitive treatments will be accommodated by medical patronizing institutions accredited by the Joint Commission International (JCI). As of 2019, the number of accredited institutions is quite small in each of the sample-countries (see Graph 3). As a result of the pandemic, the number of JCI accredited institutions is expected to surge in all countries.
Medical tourism is still in its infancy and its contribution to GDP is relatively low (see Graph 4). Thus, with income differentials among countries, with favorable exchange rates, and with comparable quality of service, the future of medical tourism is likely to overcome the Covid-19 pandemic, albeit with lower than current growth rates.