Is Medical Travel Worth the Investment?

Rick Johnson, for HealthLeaders Media, January 13, 2009

It's not hyperbole to say that if the economy were one of your patients, it'd be lying unconscious in your ICU right now. The global recession is unforgiving and indiscriminate. We're all up against it.

Credit and funding have never been so tight, but that's not to say that it doesn't exist. Before the credit crunch, Apax Partners LLP raised Europe's largest fund in 2007 to the tune of $15.5 billion U.S., according to the Wall Street Journal. The U.K.-based private equity firm—which has investments in Apollo Hospitals and General Healthcare Group, among other healthcare investments—is now in a position to benefit from low valuations.

I had the chance to meet Khawar Mann, one of Apax's London-based partners, last month at the medical travel conference hosted by Consumer Health World. Mann was on a panel of experts talking about medical travel investment opportunities. What I found so refreshing and worth mentioning about the discussion was Mann's candidness in assessing medical travel investments. In sum, he's not a big fan of them—at least not when medical travel is the centerpiece of the investment.

Mann says that Apax is skeptical about building an investment case around medical travel. A worthy investment, such as Apollo Hospitals, needs to have a core local market that has strong growth potential. If the investment has additional growth projections from medical travel, well he says that's just "icing on the cake."

This doesn't mean that Mann and other partners at Apax are skeptical about the overall impact of medical travel on global healthcare. He's just not buying into all the hype. He says the cost advantage in countries like India will continue for 10 or more years, but expects no more than three countries will find real success from the medical travel phenomenon—with Thailand, India, and Singapore the likely winners.

However, the globalization of management talent will continue to help improve health system quality and profitability, says Mann. For example, he says Apax searches for great hospital managers from around the world to insert into health system management teams. The idea is that these new managers will get better results and margins in short order. While most might look to a private equity firm foremost for capital, it is also enlightening to see what the future of global healthcare looks like through this stakeholder's lens.

Rick Johnson is senior online editor of HealthLeaders Media. He may be reached at
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