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How The Russian Crisis Hurts Medical Tourism In Israel

Nurses in Assuta Haifa hospital, Israel
Nurses in Assuta Haifa hospital, Israel
Diana Bahur-Nir

JERUSALEM — Three patients are sitting in the spacious waiting room at the offices of the Israeli medical tourism agency iMer. Through the large glass windows of its offices inside the Hadassah hospital in Jerusalem, they can see the scenic Ein Karem valley with the surrounding mountains and green forests.

Despite the breathtaking biblical landscape, the visitors are not in town for any exclusive spa treatment: indeed, the kerchief one of them is wearing suggests she has come for chemotherapy.

All three are Russian nationals, wealthier than the average but not particularly rich. What they all have in common is a very low degree of trust in their own country's healthcare system.

“When I was diagnosed with a brain tumor a year and a half ago in Russia, I was told I had six months to live,” says Dimitry Vassiliev, the marketing director for Audi Russia.

The 33 year-old is young and handsome and wears designer clothes. Only from a specific angle can one see an indentation in his skull, a hint of the surgery to remove the tumor he had undergone in Russia before coming for therapy in the Israeli hospital.

“They told me this is it, and there's not much that can be done to help you. But when you want to live — you would do anything,” he says. “We haven't sold a house or a car yet, but we did sell everything else we could. I also have colleagues helping, but if prices keep going up, no patients will come here anymore.”

Foreigners have been coming to Israel for medical treatment on an ad-hoc basis for the past 20 years. But only in the past decade has it turned into a full-fledged industry. iMer was founded in 2004 and targets patients from Eastern Europe, the Balkans, though mainly Russia and other former Soviet countries. Private hospitals in Israel were also quick to join the trend, and 2012 marked the peak of Israel's medical tourism business with direct income at no less than half a billion shekel ($129 million).

But a chain of events, culminating in the ongoing financial crisis in Russia, has led to a dramatic decline in Israel's medical tourism sector. What domestic public outrage, and even a harsh State Comptroller report, did not manage to do, Russia's annexation of Crimea and the ensuing collapse of the ruble did.

Dany Engel, marketing director at the Assuta Medical Centre, said 2014 was the tipping point. “It started with TV show Uvda (whose investigation showed senior surgeons asking tourists for extra cash under the table for treatment). The investigative piece quickly started circulating in Russian media, and we suffered the consequences that we're seen in a bad light abroad.”

In addition, new measures introduced by the Israeli health ministry to regulate medical tourism have hit the industry hard, says Engel, also citing last year's war in Gaza.

Perfect storm

But the major difficulties appeared on the Russian side, conspiring to bring about the inevitable collapse. “The international sanctions on Russia, following its annexation of Crimea, have meant troubles for Russian credit card owners and money transactions,” explains Engel. “Also, Putin prohibited public sector employees from receiving medical treatment abroad and then, the ruble collapsed. This was the hardest hit.”

Sheba hospital has seen its 2012 income from the industry of 120 million shekel halved by 2014, says director general Prof Zeev Rotstein. “The biggest success of the Israeli medical tourism industry in recent years was reaching beyond the oligarchs class,” he says. “But at times of economic crisis, this is the population that's hardest hit.” So practically for the average Russian, this has meant that Israeli medical treatment, priced in US dollars, has doubled.

So, where have all the foreign patients gone? Mostly to Germany, whose healthcare system's quality is comparable to Israel's and who saw a similar numbers of Russian medical tourists through the years. And now, after not only the ruble fell but also the euro has weakened, the German medical tourism business is enjoying a relative advantage.

In fact, realizing this new reality, Israeli medical tourism firms have also started referring Russian patients to Germany.

At the same time, new partnerships have started emerging inside Russia. “When people have no money they start looking for healthcare in their own country. This has led to initiatives of businessmen and doctors, from Israel and from Russia, to establish Israeli-branded clinics and hospitals in Russia,” says Jacky Ovadia, formerly the CEO of the Israeli medical tourism association and today a business development consultant. Others in the sector are now looking to establish a medical tourism industry in Cyprus that could employ Israeli doctors.

A Turkish cure

Meanwhile, Turkey is also keen to cash in on the trend, and has begun a massive investment to attract Russian patients. The Turkish government has made the medical tourism sector a national growth objective, no less than pleasure tourism. Turkey's health ministry is actively working to open clinics, rehabilitation centers and other medical facilities where 85% of the patients are supposed to be foreigners and the majority of the doctors will also be specialists from abroad.

But Israeli medical tourism advocates are not giving up just yet. While waiting for the ruble to recover, they try to find other countries from which they can attract patients for treatment in Israel.

“We are looking for a Plan B and that means we're considering offers coming from new markets, even China,” says Engel. “It has been a two decades long work. If we start building a Chinese market now, I don't know when it would take off. And unlike Russians, how can an Israeli doctor communicate with a Chinese patient?”

Sitting in iMer's waiting room, Sergey, a 50 year-old contractor and a residential building owner from a town in northern Russia, is waiting for treatment for an oncological problem. Asked why he came to Israel, he appears to be offended: “Do we need to die because our homeland doesn't have proper healthcare?” he responds.

“What most upsets me,” he adds, “is that my Israeli oncologist studied in Russia. Your doctors acquired their knowledge in our country, the best ones came here and we were left with nothing. I don't know what's the problem with our healthcare system, why there is such a lack of trust, but something in the system is built wrong and it's not a matter of resources.”

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