The outlook for medical tourism in Europe from 2009 to 2014

ICON Group has a new 54-page report as part of its global series on medical tourism, ‘The 2009-2014 European Outlook for Medical Tourism.’

This econometric study covers the outlook for medical tourism in Europe. For each year considered, the estimates are given for the latent demand, or potential industry earnings (PIE), for the country in question (in millions of U.S. dollars), the share in percent of the country in the region and the world.

These comparative benchmarks allow the reader to quickly assess a country vis-à-vis others. Using econometric models that project fundamental economic dynamics within each country and across countries, latent demand estimates are created.

This report does not address specific players in the market serving the latent demand, nor specific details at the product level. The study does not consider short-term cyclicality that could affect sales. The study is strategic in nature, taking an overall view and long term, irrespective of the players or products involved.

This study does not report actual sales data (which are simply unavailable, in a manner similar or compatible in almost all European countries). This study gives estimates for the latent demand for medical tourism in Europe. It also shows how the pie is divided between the national markets of Europe. For each country, it shows estimates of how the pie grows over time (positive or negative growth).

The concept of latent demand is rather subtle. The term latent typically refers to something that is dormant, not observable or not yet realized. Demand is the notion of an economic quantity that a target population or market requires under different assumptions of price, quality, and distribution, among other factors.

Economists as the industry earnings of a market commonly define latent demand when that market becomes accessible and attractive to serve by competing firms. It is a measure of potential industry earnings (P.I.E.) or total revenues (not profit) if a market is served in an efficient manner. It is typically expressed as the total revenues potentially extracted by firms.

The latent demand for medical tourism is not actual or historic sales. Nor is latent demand, future sales. In fact, latent demand can be lower or higher than actual sales if a market is inefficient.

Inefficiencies arise from a number of factors, including the lack of international openness, cultural barriers to consumption, regulations, and cartel-like behavior on the part of firms. In general, however, latent demand is typically larger than actual sales in a country market.

In order to estimate the latent demand for medical tourism in Europe, the author used a multi-stage approach. Latent demand functions relate the income of a country, city, state, household, or individual to realized consumption.

For firms to serve a market, they must perceive a latent demand and be able to serve that demand at a minimal return. The single most important variable determining consumption, assuming latent demand exists, is income.

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