Health Tourism in Portugal: Grounded
Updated: Aug 24
“The wellness market has enormous potential for Portugal, and it has been exploited to a fraction of its potential."
The pandemic has stifled health tourism in Portugal. Experts are re-examining the market to plan for the future.
However, the past of Portugal’s health care also carries much weight. Two years after the Carnation Revolution overthrew half a century of the authoritarian New State regime, the Portuguese Constitution of 1976 affirmed health as a right for all citizens. Now, 45 years later, Portugal and the rest of the world have been paralyzed by the global health crisis.
“This is the moment for redefinition and reassessment in both the health and travel sectors,” said Irving Stackpole, in his Health Tourism - Portugal: Potential or Peril? A webinar presentation to NOVA School for Business and Economics (SBE) one year ago (August 5, 2020). NOVA SBE provides research for decisions on health economics and health management policy.
Before the COVID-19 pandemic, “Portugal was headed toward another record-breaking year in travel and tourism. And, certainly, that was being communicated and promulgated as being a good thing. As a person who lives here in the heart of Lisbon in Madragoa, I can tell you that there were days when you could see the waves of people coming up from tour boats, and my wife and I were inclined to run the other way,” said Stackpole, an American.
In 2012, there were 14.6 million arrivals in tourist accommodations, according to Statistica. In 2018, that figure nearly doubled to 25.9 million.
What is health tourism?
“When people travel for the primary purpose of receiving treatment and services to help improve their health and well-being, this is health tourism,” said Stackpole, who has acted as a consultant to Costa Rica and South Korea.
Health tourism is a broad market with narrow focus, said Stackpole, co-author of Marketing Handbook in Health Tourism. For example, it includes thermal spa treatments as well as dental work, yoga and massage as well as heart valve replacements and cosmetic surgery. During the pandemic, teleconsultation has established itself as an aspect of health care.
“The market is highly fragmented and uncertain on the supply and the demand side. A consumer looking for buttock augmentation is different from a consumer looking for a life-saving procedure and different from a consumer who has had bad-fitting dentures and has decided to change that in retirement.”
A protocol document to promote medical tourism was signed last year by Portugal’s national tourist board, the Agency for Investment and Foreign Trade (AICEP), Health Cluster Portugal, and the Portuguese Association of Private Hospitalization, reported The Portugal News (January 3, 2020).
The Secretary of State for Tourism, Rita Marques, said that the protocol occurred after a study by an interdepartmental working group set up in 2016. The study concluded that Portugal had the expertise and capacity in this area.
The document read in part: “Whereas the Jose de Mello Saude/CUF Group, the Luz Saude Group and the Lusiadas Group have presented, promoted and already undertaken Medical Tourism in Portugal, this work can be extended to other providers, namely members of Health Cluster Portugal and the Portuguese Association of Private Hospitalization.”
Medical tourism’s objective was set at achieving an annual turnover of more than €100 million, according to the document.
Global health tourism value was estimated at $9.1 billion to $103.7 billion. It is most likely to be $38.8 billion to $47.8 billion at the end of 2019, said Stackpole, pointing out that market fragmentation makes it difficult to pinpoint monetary value and the number of consumers.
The number of global health tourism consumers was estimated at 6 million to 48 million in 2019 before the pandemic. It was most likely to be 6.8 million to 7.2 million, said Stackpole.
There are seven factors involved in health tourism, said Stackpole. Among them are brand and reputation.
“Portugal doesn’t need to build its brand. It’s got stability and access. . . . And, I’m not pandering: the people are lovely. I could have chosen to be anywhere in the world, and I moved here.
“Portugal doesn’t have worldwide brands, but I think it’s because of the cultural bias among the Portuguese which eschews promotion and brag. And to build a brand, you need to brag.
“I have a friend in Lisbon, an American, who moved here before my wife and me. She came down with a rare form of cancer. She scheduled a visit to (the University of Texas) MD Anderson (Cancer Center). I said: ‘Why didn’t you schedule a visit to Champalimaud (Clinical Centre in Lisbon)?’ ‘Where,’ she asked.
“So, here’s a world-class, leading-edge provider in your midst, and someone living here who didn’t know about it. You need to create a story and, then, pump the story."
A lack of promotion also has crippled other areas:
“The wellness market has enormous potential for Portugal, and it has been exploited to a fraction of its potential. I’ve visited several destinations in the country that should be world-class designations, and they are struggling to survive or are threadbare. The only reason is the lack of marketing. Thermal spa services, for example. Healthy lifestyle is one of the reasons so many more people from the United States and the United Kingdom are coming here.”
According to Taking Your Life Into Your Own Hands?: New Trends in European Health Tourism (January 2015):
“Holistic treatments generally focus on body-mind-spirit balance through yoga, meditation, massage or other spiritual practices. . . . Many holistic centers in southern Europe and elsewhere are run by northern Europeans, as the trend is much more prevalent in this region (Smith and Kelly 2006; Kelly and Smith 2009). Occupational wellness and life-coaching tend to focus on stress-management and work-life balance. Yoga tourism is also growing in most western countries (Gerritsma 2009; Ali-Knight 2009). Vinotherapy uses wine and grape-related products in treatments (e.g., baths, scrubs, wraps).
“Most European countries are developing some form of health and wellness tourism, just at different rates. For example, it seems that the wellness tourism market in German-speaking countries (Germany, Austria and Switzerland) is becoming somewhat saturated. Germany, for example, has more than 500 wellness hotels. In other countries, health tourism is only in its infancy.”
A second factor in health tourism is access, not just the physical knowledge of how to travel from the arrival location to the health care provider, but also psychological intimacy.
“The consumer needs to be able to envision being there,” said Stackpole. “If I say, ‘Let’s get a cup of coffee after this (meeting), places have to come to mind.’”
Other health tourism factors are the following: destination stability in that there is no war or violence nor geological disasters such as earthquakes or hurricanes; capacity in that there are enough medical staff, hospital beds and thermal spa placements, for example; focus of the provider in that it is prepared for health tourism; purchasing power parity for the traveler’s currency, and price, which often is mistaken as the primary mover.
“Tourism can be a bright spot in the economy but, as recent events have shown, it also can be a weak spot, an Achilles heel,” said Stackpole. “The health and the tourism sectors are under siege. The uncertainty and the no end in sight are wearing on people, and it’s having significant results.”
Portugal’s travel and tourism market contributed €26.2 billion to gross domestic product (GDP) in 2012 to the economy; and it grew incrementally to €35.2 billion in 2018, according to Statistica.
In 2018, tourism contributed 8.0 percent of gross value added (adjusted GDP minus costs), according to Statistica. Tourism employed 9.0 percent of the working population in 2017, or 413,000 people, according to the Tourism Satellite Account.
In Portugal’s overall economy in 2020, the share of agriculture was 1.98 percent, industry 19.22 percent, and the services industry, of which tourism is a part, 66.1 percent, according to Statistica.
In 2017, the government launched Tourism Strategy 2027 to drive economic, social and environmental development throughout the country and position Portugal as one of the world’s most competitive and sustainable tourism destinations, according to the Organization for Economic Co-operation and Development (OECD).
The five leading international source markets in order of prominence were the United Kingdom, Germany, Spain, France and Brazil, which accounted for 58.5 percent of demand. Growth, however, was led by intercontinental markets, including the United States, up 25 percent; Brazil, up 14 percent; China, up 14 percent, and Australia, up 12 percent, according to OECD.
What about the future?
“Which parts of travel and tourism do we want back,” asked the market consultant. “Do we want all of that to be as it was? Here is an opportunity to be more selective in health and tourism. Do we want destination marketing, where more is better, or do we want to manage the destinations?
“Some places, such as Greece, Italy and Barcelona, were aggressively overrun by tourists to the point where tourism was negatively affecting the quality of life and things such as the retention of the creative class and other individuals. . . . Some areas overrun have problematic residents who feel pushed aside, and this has created a backlash.
“Can we have more profitable tourism with fewer more carefully selected tourists?”
If Portugal does want health tourism, should it choose a national strategy or leave the fragmented markets to private sectors?
“Some countries do well without one,” said Stackpole. “Some do have one with regulatory fiscal policy support mechanisms, and laws and regulations to protect consumers and providers. South Korea comes to mind.”
Stackpole said that health tourism recovery will not be a sharp graphical V or a U. He said that he agrees with Megan Greene, a Harvard Kennedy School economist, who foresees it like the tail of the Nike Swoosh, but with a series of ups and downs as hotspots are discovered, followed by lockdowns and, then, release.
Consumers will be tentative, he said. They will travel across the city before the region; across the region before the country, and across the country before broaching international borders.
The feeling of safety will be key. Providers need to communicate their cleanliness standards effectively, he said, with a label, symbol or a certificate similar to the Good Housekeeping Seal in the United States.
“We can’t sell safety. We have to demonstrate safety through decontamination procedures and sanitation guidelines. When consumers return home, they will share narratives by word of mouth. The narrative has to be reinforced as consumers compare destinations.”
Reconsider your segmentation, Stackpole said, because consumers who previously traveled will not travel now. A 2020 survey in the United States and the United Kingdom found that respondents felt safest in their cars. If that is so, we should not be asking them to get onto a plane. Look locally.
“Public healthcare is what enables Portugal to have outstanding health outcomes,” he said. “It allows the Portuguese to have pride in the system. And the public system allows the private system to flourish. For health tourism, the primary source of service is the private health system. Private capacity is what makes health tourism, medical tourism, dental tourism, work.
“Is (health tourism) ethical? There is a steamy cauldron of debate. . . . I believe that it’s ethical because I believe in consumer choice. There’s debate about whether health-care systems should be stratified. The fact is that economic assets are distributed irregularly and those who have assets will be able to access care. In a perfect world, this wouldn’t be so, but this is an imperfect world.”
According to Health Systems in Transition: Portugal: Health System Review 2017, which was produced by the Institute of Hygiene and Tropical Medicine at University NOVA of Lisbon and the European Observatory on Health Systems and Policies:
“Health inequalities remain a challenge more generally in Portugal. The Portuguese population has become concentrated in Lisbon, Oporto and along the coast, leaving an increasingly sparse and elderly population inland. With the recent economic crisis, the rates of people leaving Portugal have risen, and traditional immigration (in particular from former Portuguese African colonies) has fallen. Portugal remains one of the most unequal countries in the EU (European Union). . . .
“Although there is a strong legal and political commitment to social rights, the impact of social determinants is not equitable in Portugal, and health inequalities remain one of the key problems for the NHS. These inequities are determined by geography (people from the interior regions have more difficulties in accessing health services; income (individuals with low-income face a greater challenge when paying for pharmaceuticals and when accessing health services not covered by the NHS, such as oral health); and health literacy (access to the internet and, consequently, to a lot of health-related information available online, is more difficult for the older populations and for those with a low educational level. . . .
“All residents in Portugal have access to health care provided by the NHS, financed mainly through taxation. Out-of-pocket payments have been increasing over time, not only co-payments but particularly direct payments for private outpatient consultations, examinations and pharmaceuticals. The level of cost-sharing is highest for pharmaceutical products.
“Between one-fifth and one-quarter of the population has a second (or more) layer of health insurance coverage through health subsystems (for specific sectors or occupations) and voluntary health insurance.
“Private voluntary health insurance covers about 26 percent of the population.”
“Private health-care providers mainly fulfill a supplementary role to the NHS rather than providing a global alternative to it. Currently, the private sector mainly provides diagnostic, therapeutic and dental services, as well as some ambulatory consultations, rehabilitation and hospitalization.”
“In 2014, Portugal had 225 hospitals, 113 of which belonged to the public National Health Service (NHS), with a total capacity of 34,522 beds.
“It is estimated that about half of the NHS-salaried doctors also work in the private sector and many independent doctors work under contract for the NHS.”
What is the origin of the National Health System (NHS)?
According to Sixty years of reform in the Portuguese health system: what is the situation with regard to decentralization (French Review of Social Affairs, 2006):
“The revolution in April 1974 marked the birth of the modern democratic system in Portugal. The wars in the Portuguese colonies stopped immediately, and the colonies attained independence soon after.
“With this decolonization process, many people living in the colonies were forced to come back to Portugal, including a great number of professionals. This provided the extra resources needed to expand the coverage of the public health system.
“In 1975, a new law created a compulsory period of service for health centers for newly graduated doctors (Serviço Medico a Periferia). This further contributed to improving the care provided by health centers.
“A new constitution in 1976 reaffirmed health as a right of all citizens – ‘all are entitled to health protection and have the duty to defend it and promote it’. This entitlement is embodied through a comprehensive, universal national health service, free at the point of delivery (later, 1990, becoming ‘mostly free at the point of delivery’).”
The National Health Service was created in 1979. According to An Overview of the Healthcare System in Portugal (ICU Management & Practice, Autumn 2006):
“Within a short time from the creation of the NHS, healthcare coverage of the Portuguese population went from 58 percent in 1974 to 100 percent in 1980 (Barros and Simoes, 1999).”
World Health Organization (WHO) estimates indicate that 11.9 percent of total government expenditure in Portugal is allocated to health in 2014 in comparison to 13.2 percent in Europe. Regarding the total health expenditure in the country, a share of 65 percent is financed by the public sector.
What is the origin of private health insurance?
In 1978, voluntary health insurance (VHI) was introduced for group policies. In 1982, individual policies became available, according to Health Systems in Transition: Portugal: Health System Review 2017. The number of people insured has grown from approximately 500,000 in 1990 to almost 2.7 million in 2015.
“There is a mechanism of double coverage in place, hence increasing mostly the number of specialized medical appointments. People can even benefit from triple (or more) coverage, that is, from the NHS, a health subsystem from their job, VHI and having coverage from another health subsystem as an extension of their spouse’s coverage. It is not uncommon for beneficiaries of health subsystems to also sign up to VHI.”
Health care is complicated in Portugal.
However, if the country does decide to pursue health tourism again, it can offer its mild Mediterranean climate as a stimulus:
“Portugal is far more accessible to the global population than the United States and Rochester, Minnesota (home of the well-known Mayo Clinic),” said marketing consultant Stackpole. “If any of you have been (there) in the middle of (their snowy) winter, you’ll know what I’m talking about.”