Every year, thousands of Africans travel to the Middle East and Asia for medical treatment. Two years ago, my mom was one of over 18,000 Nigerians who were issued visas to travel to India for medical purposes; in her case, for a knee replacement surgery.
This practice of travelling outside one’s country for medical care is widely described as “medical tourism”, a global multi-billion dollar industry that is expected to reach $32.5 billion by 2019.
For several reasons (which I’ll explore in this article), Africa has become one of the biggest sources of medical tourists traveling outside the continent for medical help. Every year, Nigerians spend more than $200 million on medical tourism to India alone. Tanzania, Kenya, Sudan, Mauritius, Egypt and South Africa are some of the other big spenders on medical tourism.
Overall, it’s estimated that Africa could be losing up to $1 billion on overseas medical services, annually – a huge economic loss to the continent.
In spite of the long travel distance, visa and accommodation costs, why did we choose to fly our mom halfway across the world – to India — for a medical procedure that should’ve ‘ordinarily’ been possible to accomplish in Nigeria?
What if she didn’t have to travel out of Nigeria at all, and got the same quality of treatment back home; wouldn’t that be great?
Of course, it would be! After all, up to half of the money spent on her trip to India was on visa, travel and accommodation expenses. Not to mention the attendant risks of transporting an ill person on a 13-hour flight across the globe.
There is a lot of money to be made here in Africa if we could corner the demand, and provide solutions for the thousands of medical tourists who leave our shores every year. We would save a lot of travel-related expenses and time in the process!
Why am I saying this?
Just last week, my dad underwent a surgical procedure to remove cataracts in his eyes. He went through a similar procedure a few years ago when he accompanied my mom on that trip to India. But this time, he didn’t have to travel out of the country. The eye procedure was done in a local private hospital in Lagos, by a specialist doctor flown in from India!
In this article, I’ll tell you more about how some smart entrepreneurs and investors are reversing the trend of medical tourism in their favour, and creating wealth in Africa’s lucrative healthcare industry.
To successfully exploit any business opportunity – like Africa’s large and growing demand for sophisticated medical services – we need to fully understand the needs of the market. It’s important that we understand the real reasons why Africans prefer to spend more money and go through the hassle of travelling to faraway places for medical care.
Here’s Why Africans Prefer To Travel Outside the Continent For Medical Care…
photo credit: wellmindness.com
The key reason why more Africans are travelling outside the continent for medical care can be summarized in one statement:
Many Africans lack confidence in the domestic healthcare industry
And there are a few reasons why this is the case.
The first is poor funding and infrastructure. Except for a few countries, the health sector in Africa remains weak due to poor funding and inadequate infrastructure. In Nigeria for example, healthcare funding represents less than 6% of the national budget; less than half of the 15% international benchmark. As a result, the skills and medical equipment required to treat most of the medical conditions that are referred overseas are not sufficient on the continent.
Second is regulation and poor standards. This has led to poor quality services in the health sector, especially in government-owned hospitals and clinics. In many countries in Africa, healthcare professionals are poorly trained and insufficiently supervised, medical equipment and infrastructure is hardly upgraded and the legal framework for medical malpractice is either non-existent or poorly enforced.
To be fair, Africa has made considerable progress in fighting diseases like malaria, polio, measles and several others. But when it comes to complex or sophisticated medical treatment like neurosurgery, cardiology, orthopedics or transplants, the capabilities to handle these are just not quite there yet.
Third is the negative perception of the healthcare industry on the continent. Even though there are a few privately-owned hospitals with suitable equipment and highly-qualified professionals who can handle sophisticated medical procedures, there is still a widespread perception that their services could fall short of international standards and clients may not get value for the money they pay for medical care, especially for complex and delicate medical procedures.
So, to avoid taking a gamble on their life and well-being, more Africans prefer to travel outside the continent for medical care. While up to half of the continent’s medical tourists travel to places like India for treatment, wealthier travelers go to the Middle East, Western Europe and the United States.
Two interesting models for cornering Africa’s medical tourism market
As you may have noticed, there’s a huge gap in Africa’s healthcare market, and entrepreneurs and investors who can fill this gap stand a good chance to effectively corner the continent’s billion-dollar medical tourism market.
The value proposition is simple: if you can provide top quality and ‘international standard’ medical care on the ground in Africa, you’ll be presenting a cost-effective alternative to medical tourism.’
And I’ll share with you two interesting models that are already at work in Africa:
1) Indian hospital chains are branching into Africa
As one of the biggest beneficiaries of medical tourism from Africa, Indian healthcare entrepreneurs and investors are already making significant moves to corner Africa’s medical tourism market by branching into the continent.
And there are several interesting examples…
Apollo Hospitals, India’s biggest healthcare chain, is investing in a $70 million, 500-bed hospital in Dar es Salaam, Tanzania. This multi-specialist facility is intended to serve patients and ‘would-be medical tourists’ in the East Africa region. The Apollo Group also plans to buy or setup hospitals in Nigeria, Ghana, Ethiopia and Zambia – which are strategic markets and lucrative sources of medical tourists.
Another Indian medical company, Biohealth, is investing $5 million in a health facility on the continent for comprehensive cardiology diagnostics, dialysis, and radiology.
The trend I’ve noticed is that Indian healthcare providers, often backed by private and institutional investors, are building hospitals from scratch or buying out (absorbing) existing facilities. This trend is likely to dominate the transformation of Africa’s healthcare industry in this decade.
2) Technical partnerships and collaborations
Another interesting business model is the collaboration and technical partnership arrangements in which private entrepreneurs and investors, or African governments provide capital or build the hospital infrastructure, and then engage experienced medical professionals from India, Europe or North America to provide the expertise and run the hospital.
Vedic Lifecare hospital in Nigeria was developed by local businessmen and investors with clinical, technological and management support from Manipal Hospital, one of India’s major healthcare providers.
The Vision Care Appasamy Eye Hospital in Lusaka (Zambia) is a joint venture between Vision Care Centre of Zambia and Appasmy Associates of India, and provides both minor and major eye services for people in that country.
Medanta AfriCare which runs a hospital in Nairobi, Kenya is another example of this business model. It’s a collaboration between RJ Corp, a construction conglomerate, and Medanta – a multi-specialty medical institute in India.
In my opinion, this model of technical partnerships and collaboration between local entities and world-class healthcare professionals provides a great opportunity for Africa to significantly develop its healthcare sector and increase the capacity of homegrown medical professionals.
Africa’s healthcare market is too interesting to ignore…
According to a study by KPMG, the healthcare market in Africa is worth over $35 billion. Although this article only focuses on the business potential of cornering Africa’s medical tourists, they are only a subset of a wider market opportunity.
Africa will have the world’s fastest growing population over the next three decades. This population boom will lead to more demand for healthcare services. The visionaries who enter the market now will likely reap the huge benefits.