5 Health & Wellness Tourism KPIs to Help You Measure, Improve and Grow Your Business

This article features several of the key talking points shared in my workshop titled, "Debunking Dubious Health & Wellness Tourism Marketing Statistics." I'll be leading a workshop on these and other KPIs at the World Congress on Strategic Marketing for Health and Wellness Tourism in February, 2018.

So many syndicated media reports and press releases from conference organizers parrot the same totally useless data to sound impressive and make click-baity headlines. For example, to report that a destination had one million health and wellness tourism patients in a years' time, means what exactly? It tells us nothing about the revenue generated, the types of services sought, any competitive advantage or expertise, and is unverifiable without corroborating data validated by some official agency.

Novices and new industry investors, unfamiliar with the business of health and wellness tourism, often take these press releases at face value. They commit to risk of tens of thousands of dollars in precious startup capital, time, and business development trying to find niches, differentiation points, and innovations.

Frequently, it isn't until the precious cash and time resources are invested and lost and/or debt undertaken in the form of angel and investor loans and equity shares are promised that the self-serving fallacies and fictitious data sources are identified and exposed. Meanwhile, the publisher of the fallacy and false data escapes with freedom from liability for the economic and opportunity damages caused.

It's high time we improved how health and wellness tourism statistics are reported and how due diligence investigation is carried out.

Health and wellness tourism key performance indicators ("KPIs") are an effective way to report comparisons between different hospitals, clinics, specialists & destinations all vying for medical, dental, mental health and wellness services.

Here are a few KPIs that can be implemented across the industry that would make data and statistics reported substantially more useful:

Revenue Growth Rates

These data are an indicator of how well a hospital, clinic, or destination is able to grow its sales revenue over a given time period. While the revenue is an actual number, the revenue growth rates simply compares the current sales figures (total revenue) with a previous period (typically quarter to quarter or year to year). This provides an indicator that allows easier comparisons between different hospital, clinic, or destination and provides a measure of the extent to which a hospital, clinic, or destination is able to grow.

Medical Tourism Net Profit

Also referred to as "net income" or "net earnings", this metric reports how much money a hospital, clinic or destination has earned from engaging in medical, dental, psychiatric rehabilitation, second opinion, telehealth consultations, wellness checkups or other health and wellness tourism business over a given period of time (usually a year). Net profit shows what is left from the money a company has earned (revenue) after subtracting all expenses.

To measure this KPI, use the following formula: Medical Tourism Net Profit = Total Health and Wellness Tourism Revenue - Total Health and Wellness Tourism Business Expenses (including operating expenses, financing costs and taxes).

A problem arises when illegitimate sales are made but not reported because the hospital, clinic, or supplier wants to avoid paying taxes on the profits. In some cases, in certain countries, medical records are used to audit sales and services rendered and invoiced. As a result, the provider of service does not create a medical record. This also leads to limitations in continuity of care, patient safety and measurable outcomes because the medical records not created cannot be provided to the patient. This problem of restricted access to medical records must be improved. The first step is to require, by contract, that a complete medical record be created at the time of service and made available to the patient.

Knowing this tidbit about the relationship of medical records creation, net profit reporting and taxes helps facilitators, the media and others critically evaluate reports about net profits, net income and net earnings reports published by conference sellers, consulting firms, bloggers, and promoters. By knowing this subtle connection, fact checkers can ask the necessary questions to avoid parroting dubious reports and news about medical tourism industry growth trends.

Average Net Revenue Per Inpatient Day

Unless a hospitals, clinics and ambulatory care centers receive 100% of usual and customary billed charges, gross charges do not accurately reflect the amount that hospitals, clinics and ambulatory (same day) surgery centers are actually paid for the services they provide. Insurance negotiators often negotiate discounts for their subscribers, resulting in payments equaling less than 100% of usual and customary billed charges.

On the other hand, many hospitals clinics and other healthcare providers (in the USA and abroad) charge medical and dental tourism patients a higher fee, sometimes as much as 200% of usual and customary billed charges arguing that payments of sometimes illegal referral broker commissions or other unusual expenses associated with translation, interpretation costs, pre-arrival telehealth consultations and medical records review and other expenses associated with the medical travel patient and their entourage.

Recognizing these differences, the Average Net Revenue Per Medical Tourism Inpatient Day KPI gives a more realistic number of what's actually happening in the business and doesn't smear costs or revenues from local patients or patients who were visiting the area but didn't come to the destination for the express purpose of receiving healthcare.

Net Revenue Per Medical Tourism Inpatient Day measures what hospitals actually receive for their medical tourism patient business. It is calculated by subtracting from gross revenue all deductions, including discounts mandated by negotiations with insurers and other third-party payers, and general bad debts and charity care. Net inpatient revenues are generated from a complex array of influencing factors, including the degree of local, regional and international competition, the services provided by the hospital, the relative negotiating leverage between the buyer and the hospital, the hospital’s overall cost of providing care and various regulatory constraints.

Customer Profitability

An indicator of how much profit a healthcare or health tourism business generates from individual customers. Customer profitability is basically a measure of the net dollar contribution made by individual customers to a healthcare, wellness or health tourism business.

I attempt to track this KPI by source market when I create medical tourism business and targeting strategies for clients. It should always be part of the business analytics when attempting to identify "ideal customers" for brand messaging relevance and targeting for marketing, market expansion, and other medical tourism adaptations to prepare to receive and do business with international consumers and third-party payers. However, if the client before me has never attracted international or domestic medical tourism patients in the past, the client risks that their assumptions about target markets and customer profitability, in the absence of this data, can be totally wrong.

SAVE THE DATE

New health and wellness tourism market entrants and those established and seeking new avenues and referral sources or to penetrate new target markets usually head to the internet to conduct their research and find data about destinations, healthcare facilities, specialists, and market trends. These researchers are often the targets of many publishers seeking to deliver targeted messages about conferences, dubious accreditations, designations and certifications and other things being sold to them like pick axes to gold diggers.

These researchers don't go looking for advertising. They are hunting for what appears to them to be reliable data. The problem is that many simply don't know what they don't know. They are then unwittingly taken advantage of by those who would separate them from the startup cash for little value in return. Caveat Emptor!

You won't find these KPIs in advertising and promotional blurbs because that kind of data is not usually published by health facilities and other authoritative and unbiased data sources.

To publish these KPIs takes effort and verification and market knowledge to even know of its importance. Most medical tourism and international patient departments work on directives from the executive team. If the executive team does direct and not hold the department who creates the data accountable for reporting it, it is not collected and reported in this way. Many health and wellness tourism providers fail to assimilate and measure these data so they really don't have a good grasp on the revenue performance and growth of their medical tourism and wellness product lines. They just want "more patients." They risk a reality that getting more patients could really translate to "more loss". That's because few use activity-based costing to analyze target nearly-true incremental direct costs associated with their health and wellness tourism product costing, product line profitability analysis, customer profitability analysis and service pricing. Without activity-based costing ("ABC"), health and wellness tourism product owners cannot improve corporate focus and strategy until costs of service delivery and marketing are better grasped. Costs of labor, administration, clinic time, and marketing spend are not analyzed against the returns from health and wellness tourism services delivery.

The ABC system of cost accounting is based on activities, which is any event, unit of work or task with a specific goal — such as contracting with facilitators to attract referrals, designing health and wellness tourism packages, marketing health and wellness tourism services (website, conference and B2B attendance, buying or earning international certification and accreditation badges, cultural sensitivity and language training for the staff, or direct patient care, etc.) Activities consume overhead resources and are considered cost objects.

Under the ABC system, an activity can also be considered as any transaction or event that is a cost driver. A cost driver, also known as an activity driver, is used to refer to an allocation base. Examples of cost drivers include IPD establishment, training for the staff, software, telephones, desks, and work tools, the software support and intranet maintenance, power consumed, revenue management activities and currency exchange fees, quality management activities and inspections or telehealth consultations and patient pre-admission and post-discharge activities and support, and someone to interact appropriately and timely with facilitators and referral agents to produce quotes, review medical records, etc..

Coupled with this, there are two categories of activity measures: transaction drivers, which involves counting how many times an activity occurs, and duration drivers, which measure how long an activity takes to complete.

Someone intent on selling conference tickets, certifications, proprietary accreditations, and other representative marketing seals and badges doesn't care about these data points because they may not paint the inferences and extrapolations that advance their product sales. They care about promoting the hyperbolic numbers that will entice people to buy what they are selling regardless of the realities of the marketplace and the likelihood that buyers of their products will reach the inferred volumes of patient traffic and revenue. They have every right to do this. But again, Caveat Emptor. No one is holding a gun to your head to buy what they sell or believe the data they report unless it can be explained in terms that make business sense and are verifiable or credible to the reasonably prudent business person.

Therefore, you must seek this data direct from the source. But when I waste my time in B2Bs and I ask these questions of the people seated in the chair across from me, NOT ONCE have I every encountered an individual sent to a medical tourism conference who can (or is willing to) answer these questions or even knows what I am talking about. That's why I call it a waste of my time. For all the detail the B2B participants can provide me (expensive printed brochures and meaningless, unreliable fantasy price lists) I can visit their website. I don't need to attend a B2B to get this data.

In all my years of attending B2B meetings, I've never been provided quality or safety data and outcomes data that I need to vet a provider. Instead, they bring me a picture of their accreditation or certification plaque on the wall. They don't bring me data about the languages spoken by their medical staff and nurses involved in direct patient care. Instead they tell me they will call an interpreter on the phone. They bring me brochures with stock photography images, not the photos that capture the real setting in which patients will experience care.

These examples lead me to two conclusions: either the data is not being collected, analyzed and report and is unknown to the people sent to market the health and wellness tourism product, or the output data exists and the intention of the health and wellness tourism seller is not to share it. Either way, in the end, the B2B meeting is clearly a waste of my time and investment to attend the event unless I am being paid to present and fully hosted. Otherwise, I don't need to be there. The KPIs I've shared above debunk the hype of giant numbers and enable us to make decisions and form impressions and strategies and tactics and marketing campaigns and develop product lines for health and wellness tourism based on realities.

Return on Innovation Investment

First we must establish that health and wellness tourism are "innovations". That is to say that they are a new method, idea, product, etc. So many health facilities and doctors don't view health and wellness tourism as innovations. They view it as an extension of that which they are already doing - and merely selling off excess capacity. I find these are the first sellers to fail. Always.

A health and wellness tourism service, properly configured is an innovative new product or method of selling healthcare and wellness services. The turning point is the "creation of service bundles into packages" versus merely "fixing fee-for-service appointments". Many of the emails I receive from doctors and dentists want more appointments. They have no "bundled packages" created and prepared for the marketplace.

Return on Innovation Investment measures the returns generated from investments in innovation. The formula for this KPI is: Return on Innovation Investment = [(Net Profit from new products and services) - (innovation costs for these products and services)] / (innovation costs for these products and services).

When doctors and dentists email me and ask for "help" or "cooperation" or "collaboration" to enter medical and dental tourism, they come from two distinct groups:

• The first, those that view the medical and dental tourism as an extension of their existing activities and want more appointments are using the words "help me" as a periphrasis instead of saying "Please send me referrals of persons who will fix appointments for what I currently sell". They will never see the need to measure a KPI for Return on Innovation Investment.
• The second group is made up of those who view medical and dental tourism as an innovative product they wish to design and launch. They use the term "help me" to request assistance by hiring a fee-based consultant to assist them in the development of their medical and dental tourism product innovation while the first group is not. This second group will immediately want to know their expected Return on Innovation Investment; not how much I will charge them or how clever I am. Without the completion of a situation analysis and key competitor assessment, it is impossible to provide them with an estimate of Return on Innovation Investment. And that takes initial investment - the kind a physician entrepreneur makes. The doctor who just wants to grow his practice by adding international or out-of-market customers by simple referrals for appointments is not really an entrepreneur in the business sense of the word because he or she isn't prepared to take on greater than normal financial risks in order to do so. The risk is that the situation and competitive assessment is performed, analyzed and the recommendation is not to move forward, even though the bill for the situation and competitive assessment.

 I hope that this article on these five Key Performance Indicators (KPIs) of health and wellness tourism business have been enlightening for you and that you'll put them to use to measure, improve and grow your medical and dental tourism business. If you believe you'd benefit from learning more, please save the dates and plan to attend my workshop on "Debunking Dubious Health & Wellness Tourism Marketing Statistics" or invite me to lead this 4-hour workshop and Master Class for your organization or medical tourism cluster association in 2018.

About Maria Todd

Maria Todd is the author of the Handbook of Medical Tourism Program Development and The Medical Tourism Facilitator's Handbook, along with 16 other professional and indispensable handbooks and business management books written for physicians, hospitals and healthcare organizations.

She teaches Master Classes on Medical Tourism startup and strategy through the Healthcare Business Institute and also offers personalized coaching in St George, Utah (112 miles north of Las Vegas). She has been hired to develop the national medical tourism strategies for several countries in Europe, Latin America and the Middle East.

She guides physicians, dentists, private and public hospitals and clinics and facilitators through the strategic planning, branding, digital marketing and execution of medical tourism startups. A typical engagement starts with a brief confidential interview and completion of a workbook assignment in which the physician or business owner gives forethought to many of the decisions about all the moving parts that are involved in the medical tourism offer. From there, a personal one-on-one consultation occurs (either in St George or the client's location) in which the workbook outputs are reviewed and finalized over a private training session. This sets the strategy and launch plan to paper which can then be used for business plan construction, and consultation with attorneys, accountants, and tourism authorities and to guide next steps to set operating budgets and revenue projections for the first 3 years. After this intense level of guidance, the client is usually able to launch independently and only call on her on an as needed basis.

If you'd like to know more, please contact her at 800.727.4160