A look at the coming trends of this emerging health benefit option
By Laura Carabello, Editor, Medical Travel Today
Medical travel emerges as a significant business opportunity for 2009 and beyond as the industry moves from hype to adoption. We learned from a recent Deloitte study that an estimated 750,000 Americans traveled abroad for medical care in 2007, with a forecast that this number would grow to six million by 2010.1 While some consider this to be an inflated projection, there is widespread optimism regarding industry growth. Many characterize medical travel as a sector that is truly at its ‘tipping point,” with several key trends contributing to its expansion.
Economic Downturn
With the shrinking economy, medical travel can expect to see a fall-back period in 2009 in terms of growth, but this will be coupled with a more widespread search for cost efficient, high quality alternatives in healthcare, like medical travel, which provide the added benefit of lower out-of-pocket expense and financial or time-off incentives. Growing awareness of what medical travel offers will lead to an enormous surge in the adoption of this emerging healthcare option.
Medical Trends to Look for in 2009
Short Term Uptake
Many employers will begin to follow the trend of the past few years and embrace the concept of medical travel, which means that 2009 will provide the time needed for companies to learn more about it, find a partner company to facilitate its adoption, and essentially prepare for implementation in 2010. The coming year will also provide a time for international providers to optimize continuity of care, quality standards, and outcomes reporting, as well as address liability issues.
Many employers will begin to follow the trend of the past few years and embrace the concept of medical travel, which means that 2009 will provide the time needed for companies to learn more about it, find a partner company to facilitate its adoption, and essentially prepare for implementation in 2010. The coming year will also provide a time for international providers to optimize continuity of care, quality standards, and outcomes reporting, as well as address liability issues.
Likewise, responsiveness to the medical travel option will continue to grow among U.S. physicians, who will play a critical role in the after-care of medical travel patients. Arnold Milstein, the San Francisco-based chief physician of Mercer Health & Benefits, reports that employers are beginning to include in-hospital networks as an option for accessing care outside the United States.
While most insurers do not yet include foreign providers in their networks, they are beginning to actively consider it, and new health insurance plans will follow the lead of Wellpoint, BlueCrossBlueShield and Aetna in offering a medical travel option. Likely adopters also include smaller, regional health plans, PPOs and stop-loss insurance carriers.
Long Term Adoption
Global and economic realities will play a major role in the medical travel boom, along with increased interest among employers, employees, and venture capital organizations. As more serious surgeries are performed overseas, there will be greater “word-of-mouth” sharing among employees. Internet portals for booking travel and selecting facilities will emerge followed by increased Internet use for connecting to facilities overseas.
Increased Stakeholder Interest
Employers
Results of a survey of 400 U.S. corporate benefit managers released in 2008 by the International Foundation of Employee Benefit Plans, a Wisconsin-based research group, show that 11 percent of employers now cover medical tourism.1
In a move that represents the thin edge of the wedge, the nation's second-biggest health insurer, Indianapolis-based Wellpoint Inc., now offers medical tourism to its employees. Starting in January 2009, Wellpoint will offer employees of Wisconsin-based Serigraph Inc. the option of traveling to India for nonemergency procedures such as joint replacement surgery. Serigraph will waive the insurance deductible and co-insurance for employees who agree to go, paying all medical costs as well as travel expenses for the patient and a companion.2
Health care decision-makers have only to look at the cost comparisons to understand why the widespread acceptance of medical travel is inevitable.
- Apollo Hospital in India charges $4,000 for cardiac surgery, compared to about $30,000 in the United States.
- Hospitals in Argentina, Singapore, or Thailand charge $8,000 to $12,000 for a partial hip replacement — one-half the price charged in Europe or the United States.
- Hospitals in Singapore charge $18,000 and hospitals in India charge only $12,000 for a knee replacement that runs $30,000 in the United States.
- A rhinoplasty (nose reconstruction) procedure that costs only $850 in India would cost $4,500 in the United States.1
Other sources offer similar comparisons:
Patients
Given the cost comparisons, it’s no surprise that, in a remarkably short time, medical tourism has catapulted into a multibillion-dollar worldwide industry, accelerating the globalization of health care. For U.S. residents, the current economic crisis and potential loss of jobs or insurance coverage are likely to prompt more patients to seek less expensive health care options outside domestic borders.
In many ways, the bad economy has created a “perfect storm” in which awareness and demand for cost-efficiency and high quality will grow. There are many reasons why prices for treatment are lower in foreign hospitals:
- lower labor costs
- less or no involvement of third party payers
- minimal cost-shifting of charity or indigent care to economically advantaged patients
- less stringent regulatory environments
- lower costs for malpractice insurance/litigation.
Lower Labor Costs
According to physician-economist Michael D. Horowitz, M.D., MBA, management activities contribute substantially to the reduced price of medical services in medical tourism destinations where hospitals and other health care providers are able to purchase labor and supplies at much less cost.
“In the United States, health care organizations are required to collect and analyze information on myriad things. Although some of this is certainly important for patient care, documentation and reporting requirements consume an unimaginable amount of employee time and energy. However, in many medical tourism destinations, there is much less bureaucratic burden for physicians and hospitals. Paradoxically, the drive to achieve and maintain accreditation from organizations such as JCI and ISO will increase documentation requirements for such offshore facilities. However, because employee wages are relatively low in developing countries, the cost of fulfilling these requirements is less onerous.”1
Availability of Insurance Coverage
Nagging doubts among stakeholders regarding the safety of medical travel will diminish as positive first-hand accounts of medical travel begin to proliferate. Healthcare providers overseas often employ physicians with internationally respected credentials, many of them with training in the United States, Australia, Canada, or Europe. Many are fluent in English. Some foreign hospitals are owned, managed, or affiliated with prestigious American universities or health care systems such as the Cleveland Clinic and Johns Hopkins International.
Liability insurance coverage is now available from companies such as Custom Assurance (South Carolina) and Seven Corners (Indiana) – providing “peace of mind’ for both employers and patients.
Accreditation on the Rise
More than 200 hospitals abroad are now accredited by the Joint Commission International (JCI), an arm of the organization that accredits American hospitals participating in Medicare; many more are accredited through the International Standards Organization (ISQua); and some countries are adopting their own accrediting standards. International hospitals are demonstrating that they can compete on both price and quality.
Medical Travel Intermediaries
Patients who are not familiar with specific medical facilities abroad can coordinate their treatment through medical travel intermediaries. These services work like specialized travel agents – and there are signs that some of the high profile travel agencies are also getting into the business.
Medical travel coordinators investigate healthcare providers to ensure quality and screen customers to assess those who are physically well enough to travel. They often have doctors and nurses on staff to assess the medical efficacy of procedures and help patients select physicians and hospitals.
Many Americans are selecting a destination based upon their interest in traveling to that country as a tourist and combining the medical services with the trip. These medical tourism companies can assist patients with this information, although they all advise that selecting the appropriate doctor and hospital should be the most important criteria.
Many Americans are selecting a destination based upon their interest in traveling to that country as a tourist and combining the medical services with the trip. These medical tourism companies can assist patients with this information, although they all advise that selecting the appropriate doctor and hospital should be the most important criteria.
More Serious Procedures
While aesthetic surgeries and dental care might lose numbers to the recession this year, these procedures will continue to be popular because they are not covered by insurance. A survey conducted by Medical Travel Today showed that 13 percent of respondents were interested in cosmetic procedures abroad, especially dental (12.5 percent), cosmetic (12.5 percent), orthopedics (11.6 percent), neurosurgery (10.7 percent), and bariatrics (10.7 percent).
Cosmetic procedures performed overseas by world-class doctors can save Americans thousands of dollars, with breast augmentation surgery costing $5,000 less in India and Thailand, and an average savings of more than $2,000 for rhinoplasty in India, Singapore, and Thailand.
The truly significant trend, however, will be the increase in patients traveling abroad for serious surgeries and procedures, including orthopedics and joint replacement, cardiac, in vitro fertilization, and bariatrics, as well as procedures not available in the United States such as stem cell transplants. India, in particular, has seen a rise in major organ transplants and heart surgeries because of their low cost and high quality.1
Do-It Yourself Health Care
Patients rely on online communities to gather information on the safety and quality of medical providers by reading the testimonies of other patients who have had surgery abroad. This is allowing more patients to bypass their primary care physician in search of reliable, first-hand information about medical travel – a trend that will further erode the competiveness of the U.S. health care system, which on its current path promises to go the way of the auto industry.1 This grass-roots swell of interest will serve to further induce employers and insurance companies to, at the very least, implement medical travel pilot programs.
Recently, The Economist predicted that medical travel will have a direct influence on the status quo of U.S. healthcare as the millions of operations conducted overseas will shrink revenue dollars back home, resulting in increased price transparency and much-needed reform.2 It is a phenomenon that marks the true globalization of healthcare, putting U.S. healthcare providers on notice that their services and pricing must be competitive in order to attract Americans who are unable or unwilling to cover the bloated costs of care.
For example, Galichia Heart Hospital, in Wichita, recently lowered its price for a coronary bypass to a flat $10,000. The hospital discounts a number of procedures for patients willing to pay cash up front, including a hip replacement for $12,000 -- about one-third of the going U.S. rate. Discounts stem in part from a building boom that is now putting pressure on administrators to fill new facilities. Several networks of domestic hospitals have been organized, touting price points that meet or are lower than some international providers. 3
2009: A Critical Year
This year will be a crucial one for health reform, whether it begins under the country’s new leadership or through market forces. A fall-out in the number of medical travel companies is bound to occur, as the cream rising to the top displaces less competitive companies. Mergers and acquisitions will be fueled by venture capital organizations that recognize opportunities in this field. At the same time – and from the other end of the spectrum – medical travel will see a greater American presence of international companies seeking to create a higher profile in the United States and to help facilitate seamless adoption and implementation. There will also be a number of insurance products materializing, offering employer and individual coverage options.
It is likely that in the coming year, medical travel will experience a lull akin to the eye of the storm. Clearly, U.S. employers, third party administrators, and insurance companies have reached a tipping point and will begin rolling out meaningful medical travel programs that will give employers and employees the chance to save money without compromising health care.
Laura Carabello is Chief Creative Officer, CPR Strategic Marketing Communications. She is publisher and managing editor of the leading online newsletters, Medical Travel Today (www.medicaltraveltoday.com) and Your Medical Travel (www.yourmedicaltravel.com). Carabello has more than 25 years' experience in health care marketing strategy, planning, and corporate communications. lcarabello@cpronline.com; 201.641.1911 x12
1. Deloitte; Medical Tourism: Emerging Phenomenon in Health Care Industry; http://deloitte.com/dtt/article/0,1002,sid%253D127087%2526cid%253D217866,00.html
2. NCPA; November 1, 2007
3. Yee, Chen May; Wellpoint soon will offer some medical travel benefits; Star Tribune; November 13, 2008; http://www.startribune.com/lifestyle/health/34436164.html?page=1&c=y
4. NCPA; November 1, 2007
5. Horowitz, Michael D., MD; Why is Offshore Medical Care so Inexpensive?; Medical Travel Today, October 2007.
6. Barron, Noah; Medical tourism and the Internet; November 7, 2007; http://www.ojr.org/ojr/stories/071107Barron/
7. Barron, Noah; November 7, 2007.
8. Vaitheeswaran, Vijay; 2008 Intensive scare; The Economist; November 19, 2008; http://www.economist.com/theworldin/displayStory.cfm?story_id=12494662&d=2009
8. Vaitheeswaran, Vijay; 2008 Intensive scare; The Economist; November 19, 2008; http://www.economist.com/theworldin/displayStory.cfm?story_id=12494662&d=2009
9. Smith, Anne Kates; Need Surgery? Try the Heartland; Kiplinger's Personal Finance; Sunday, January 4, 2009; Page F03; http://www.washingtonpost.com/wp-dyn/content/article/2009/01/03/AR2009010300030.html?
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