The Impacts of Medical Tourism in India

The Impacts of Medical Tourism in India

Sophia Sanchez

The European Union (EU) recently introduced the General Data Protection Regulation (GDPR), which requires service providers to use, store, and process the data they collect about EU citizens in a safe and private manner. Notably, this regulation will also apply to Indian hospitals that cater to EU citizens. India is one of the most popular medical tourism destinations, and the country draws large numbers of medical tourists from Europe, the US, Canada, and even other Asian countries. The regulation also mandates service providers to uphold the rights of EU citizens while handling, transferring, or deleting their data.

Observers have noted that Indian hospitals that cater to EU citizens cannot afford to ignore this regulation—mainly because the costs of non-compliance are exorbitant. This report notes that fines for non-compliance can be as high as 20 million Euros or 4 percent of annual turnover, whichever is higher. The report also urges India’s private hospitals to ensure compliance to the GDPR by organizing awareness campaigns and training programs. One hopes that the need to train caregivers does not increase the cost of private healthcare for Indian citizens. Interestingly, this recent development allows us to examine the divide between India’s public and private healthcare sectors.

A preliminary perusal of the literature surrounding healthcare in India reveals one common thread: private healthcare is expensive, exclusive, and largely inaccessible, whereas public healthcare is inadequate and substandard. The latter is mainly accessed by the country’s marginalized and poor—in other words, by those who cannot afford private healthcare. By extension, India’s private healthcare is accessible only to its elite and middle-class populations. Moreover, Menaka Rao reports that almost 95 percent of household healthcare expenditure is borne by patients and their families. That is, more often than not, healthcare constitutes an out-of-pocket expense in India. This means very few Indians have their healthcare paid for through insurance.

This situation is particularly perplexing because the Indian Constitution guarantees free healthcare to citizens. Yet, the Indian government has been unable to prevent the segmentation of healthcare. In fact, as this article aims to show, several observers claim that the government has actively encouraged segmentation. It can be argued that the Indian government has effectively outsourced governance to the private sector by doing so. It must also be noted that India’s private healthcare industry is dominated by for-profit establishments.

Therefore, it is in this context that we must examine India’s emergence as one of the most popular destinations for medical tourism. Indeed, the Indian government has incentivized medical tourism, and the industry has flourished since 1991—the year in which India liberalized its economy. To be sure, medical tourism has had positive effects on India’s economy. However, as Vivien Runnels and Leigh Turner have noted, medical tourism is equally characterized by a number of rather ‘disturbing’ elements. In particular, they argue that the contemporary form of medical tourism heralds ‘the development of a form of globalised for-profit healthcare’.

This is all the more troubling because it takes a lot of money to market, promote, and sustain medical tourism. And the Indian government has actively diverted public resources to boost medical tourism despite its inability to ensure free healthcare, as promised by the Indian Constitution. Therefore, it is relevant to wonder whether the Indian government’s stance is justifiable in this context. For instance, how can a government prioritize the needs of international medical travelers/tourists at the expense of its own citizens? This is not to implicate international medical travelers; the right to travel to foreign countries in search of timely and affordable healthcare is an important one. Nonetheless, it is important to state that the for-profit medical tourism model is more problematic than it is good. To do so is to examine the ethical and social implications of over-promoting medical tourism and private healthcare.

Notably, medical tourism is not a recent phenomenon. Admirers and staunch critics of this phenomenon are quick to point out that medical tourism is thousands of years old. Yet, the practice remains poorly managed and largely misunderstood. It also polarizes opinion. For instance, admirers typically note the economic benefits of this practice: this essay on India’s medical tourism industry cites a study conducted by the Confederation of Indian Industry (CII) and McKinsey Consultants, which suggests that medical tourism has the potential to contribute as much as 5 billion dollars to the Indian economy. On the other hand, critics of medical tourism argue that it is equally important, if not more important, to examine its ethical, social, and cultural implications.

In this article, I argue that these implications can be understood only in relation to the barriers that prevent India’s poor and the lower-middle class from accessing quality and timely healthcare. Therefore, what follows is a brief account of the characteristics of private healthcare in India. Rao notes that almost 52 percent of out-of-pocket private healthcare expenditures are generally spent on medicines. More tellingly, her report throws light on the fact that ‘the use of medicines and consumables is irrational or unnecessary’. That is, patients tend to comply when asked to buy medicines, equipment, and devices in the bulk—far more than the necessary amount. To elaborate, the author cites expert testimony to argue that non-state, private hospitals continue to charge patients even when there is little or no chance of their survival.

The expert also suggests that doctors often provide poor, inaccurate prognosis. In addition, Rao reports that patients who visit private hospitals are often forced to purchase all medicines and consumables from in-house pharmacies, effectively preventing them from seeking cheaper alternatives. Not only do private hospitals actively seek profit, but they do so by barring patients from purchasing medicines elsewhere. Rao argues that India’s private hospitals employ this strategy to extract the highest margin of profit, which can sometimes be as high as 1737 percent! She writes, ‘An institutional bulk purchase allows them [private hospitals] to buy medicines and devices at a cheaper rate than the written maximum retail price or MRP’. Moreover, MRPs for medicines are assigned in an arbitrary manner, which encourages hospitals to purchase from the highest bidder. In turn, this allows hospitals to extract higher profits of margin.

To be fair, the Indian government has taken efforts to reduce the cost of private healthcare by capping the price of medicines, consumables, and devices. In addition, India’s 2015 National Health Policy featured a suggestion for a universal healthcare plan. This plan would have covered the healthcare needs of all Indian citizens, irrespective of their income, age, employment status, or financial situation. However, private hospitals have found innovative ways to keep healthcare costs at exorbitant levels.

Amit Sen Gupta notes that private healthcare tends to drive the poor into debt. Similarly, this EPW report authored by the Forum for Medical Ethics Society, a voluntary, not-for-profit organization located in Mumbai, India, argues that there exists a well-established link between poverty and India’s unregulated healthcare costs. Ultimately, scholars argue that the Indian government should spend more to improve the quality of public healthcare.

Developing countries are increasingly presenting themselves as attractive medical tourism destinations. In this context, it is necessary to ask whether these countries have the resources and policies to ensure timely access to quality healthcare for their citizens. In other words, policy makers must examine not only the economic impact(s) of medical tourism but also its social consequences. In India, where healthcare is segmented, this consideration is all the more necessary. Not only are Indians overcharged by the private healthcare industry, valuable public resources have been actively diverted to meet the demands of medical tourism. This has resulted in the marginalization of India’s poor, as well as its public healthcare.


Sophia Sanchez is an independent ESL tutor with diverse interests, who lives and works mainly in the US.