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The Impact of APAC Medical Tourism on Operating Room Equipment Sales

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Published on : Nov 22, 2016

For any hospital, the operating room is where the bulk of its expenses lie. Operating room equipment is extremely expensive and the situation does not seem to be changing any time soon. This is the biggest reason as to why private practitioners rarely have their own operating rooms. Given the heavy expenses incurred by a healthcare service provider on the purchase of operating room equipment, the manufacturers are severely restricted to chasing large and a finite amount of medium-sized clients from the healthcare sector. At the same time, these manufacturers are also becoming aware and concerned over the cost of making the equipment as there is a strong limitation to the number of players that can exist in the market. Most manufacturers strike long-term contracts with healthcare service providers to maintain a positive revenue stream, leaving very little scope for new manufacturers to assert their share in the market.

The problem is further complicated by shaky healthcare insurance coverage and reimbursement policies. Healthcare expenditure in developed economies is actually showing a slow decline as costs are high and insurance coverage does not include everything that patients may need. In the light of this situation, the medical industry in Asia Pacific, particularly in India, is witnessing a very favorable rate of growth. Medical tourism is becoming a highly popular buzzword among patients from North America and Europe as it is far cheaper for them to travel to India for medical treatment, especially of the surgical kind.

Manufacturers of operating room equipment thus find themselves focusing more on Asia Pacific, where the sheer population percentage alone is a reason strong enough to deal out heavier investments. As the healthcare infrastructure in this region improves rapidly, operating room equipment manufacturers and distributors from developed economies find themselves pitching up facilities within or close to Asia Pacific and even Latin America. The market for medical tourism in India is expected to reach as much as US$8 bn by 2020, according to the CII, fueled by the same reasons mentioned above. This is therefore a highly lucrative avenue for the manufacturers of operating room equipment.