As Medical Tourism Grows, Hold On We’re In For a Wild Ride

Until now, medical tourism has been a curiosity, iconic “Wow, Look How Flat the World Is Becoming,” fodder for stories on 60 Minutes. But as health insurers and employers get into the act, get ready for some Battles Royale.

Of course, it was only a matter of time. With surgeries costing tens of thousands of dollars less in India and Thailand than in Indiana and Tucson, and with companies ranging from GM to Citigroup desperately trying to shave health care costs to fend off bankruptcy, you knew it wouldn’t be long before insurers or employers began offering incentives – or forcing – patients to have their surgery overseas.

Starting this month, some employers working with WellPoint, the nation’s largest health insurer, will begin offering their employees substantial discounts if they choose to have their surgery in India. The Indian hospitals are accredited by Joint Commission International (JCI), the arm of the Joint Commission that’s in the business of blessing foreign hospitals. If they are like most of the foreign hospitals catering to international tourists, chances are that the quality of care is more-than-acceptable and the quality of service would make the concierge at the Ritz jealous.

The press release trumpeting WellPoint’s arrangement oozes with PC spin:

Members will now have more choices regarding where to receive care and a greater involvement in the care they receive.

Well, what could possibly be controversial about that?!

I’ve written two articles for the New England Journal of Medicine about international teleradiology and other digitally-facilitated outsourcing (here and here), another burgeoning piece of our newly flattened world. That phenomenon is far from fantasy: thousands of patients in American ERs will have their x-rays read tonight by physicians sitting in India, Zurich, Tel Aviv, and Sydney. But because this happens behind our professional curtain, the debate over tele-whatever has largely been Inside Baseball (Is the quality adequate?

Do the non-U.S. docs need American malpractice coverage? Can the foreign docs bill Medicare? [Answers to date: 1) Seems reasonable, a few anecdotal glitches, but no good studies; 2) At this point, yes; 3) Presently, no – the local docs bill Medicare for their “final read” in the morning and they or their hospitals compensate the foreign docs]). It’s all been back office and arcane enough that it hasn’t been terribly controversial.

While medical tourism seems poised to be more controversial, its limited niche thus far has attenuated the arguments. To date, most participants have been un- or under-insured people trying to control their out-of-pocket costs for elective surgeries that require large cash payments, such as plastic surgeries and elective hip replacements. So most surgeries have involved private arrangements between patients and international providers, sometimes facilitated by intermediaries that have sprouted up like weeds. (Since nobody needs a travel agent anymore to book a vacation to Paris, up pops a new tourism niche. Capitalism’s resiliency never ceases to amaze.)

As I said, as long as these were private choices, the potential reach of medical tourism was muted, as was the controversy. But every healthcare insurer and large employer is now actively scrutinizing the concept, and many find it quite appealing. Of course, sensitive to the politics, it is unlikely that any of them will flat-out force their customers/employees to travel to Thailand or Singapore. The pressure will be more subtle: with savings of tens-of-thousands of dollars per case at stake, there is enough money around to waive patient co-pays, give insurance discounts to employers, and cover travel expenses – including in-flight drinks and headphones – and still come out way ahead. As Brian Lindsay wrote in a terrific piece in Fast Company last March,

“They [patients] don’t – and we don’t – want to be in a situation where an insurer says, ‘You have to go,’ ” says Victor Lazzaro, CEO of the [medical tourism] packager BridgeHealth International and a former executive at Prudential… One solution is to be up front with patients about the true cost of their treatment and offer to share the savings with them. In light of what it costs for a fresh set of knees in the States – $45,000 and up for the uninsured – and the huge discounts overseas, it’s conceivable that patients might come out ahead if they let a Thai doctor install them. Of course, just because insurers won’t use a stick doesn’t necessarily mean the dangling carrot couldn’t be considered coercion in its own right.

The wars will be fascinating and the battles lines will be fluid and a bit unpredictable. Consider unions, for example. On the one hand, the cost savings for companies that insure their workers may help preserve union jobs or allow for cost savings to be passed on in the form of higher salaries or richer benefits. On the other hand, as local hospitals are hurt, unionized service and nursing jobs may take a hit. So should unions be for medical tourism or against it? Who knows?

But one set of losers seems clearer: domestic providers, particularly cardiac, plastic, and orthopedic surgeons. Again, from the Fast Company article,

In one fell swoop, [the surgeons] devolve from the rock stars of the OR to glorified mechanics, and they’d really only have themselves to blame. Overseas patients routinely return home raving about the personal attention shown by their Thai or Indian surgeons. Even before arriving, patients can trade phone calls and emails with doctors. (Nothing punctures the myth of American medical invincibility quite like the experience of having a doctor who actually speaks to you.)

I participated in a panel on medical tourism at last October’s American College of Surgeons meeting, and many of the docs in the audience were pissed. Using those computerized audience response gizmos, the surgeons in attendance were asked: If a patient returned from surgery abroad with a complication and came to see you, would you agree to care for the patient? A clear majority answered “No.” (Had there been a choice called “Hell, No!” I’d wager that it would have been the winner). Surely Hippocrates would be turning over in his grave, but I’m guessing that Hippocrates didn’t have to pay $100K/year in malpractice premiums or watch his 8 years of residency training become devalued by foreign competition.

How will all of this play out? It seems likely that medical tourism will continue to grow, as will the number of concerned responses from domestic providers (mostly guild behavior and protectionism clothed in the garb of patient safety and quality). I’m sympathetic to my colleagues’ reactions, but look, the status quo isn’t acceptable: We’re spending $2 trillion dollars per year on healthcare and still have nearly 50 million uninsured people, 100,000 yearly deaths from medical mistakes, huge and clinically indefensible variations in care, and outcome and performance measures that are as likely to be sources of shame as pride. If flattening our world improves value (quality divided by cost), either through the new internationalized care or by goosing our own system into action (the now-familiar disruptive innovation), that’s got to be a good thing.

But for domestic providers, it might not feel so good. Yes, foreign competition led the Big Three automakers to build better and more efficient cars – but they answered their wake-up call too late to save their hides. The risks to domestic healthcare are not as monumental as those playing out in Detroit (it is one heck of a lot easier to buy a Camry at San Francisco Toyota than to get a CABG in Bangkok, and every now and then a Bangkok airport shutdown or a Mumbai terrorist attack will make some Americans hesitate before getting on that plane). And there are hundreds of issues still to be worked out: can patients sue for medical malpractice, how do you ensure continuity of care for patients receiving care both domestically and internationally, will medical tourism compromise local care for Thais and Indians, will middlemen start siphoning off too much of the savings or acting unethically, and much more.

But in the end, the Flattening of Healthcare is inevitable. And, while it will be controversial, it may also represent the kind of shakeup our system requires if it is ever to deliver the value Americans need and deserve.

So hold on tight. We’re in for a wild ride.

39 replies »

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  5. The care they provide is what is best for the patient rather than what the insurance company demands. There’s also the fact that in border countries such as Mexico, doctors routinely train alongside American doctors in medical schools and put that quality education to use in their native country.

  6. Great Blog. I’ve visited hospitals in Mexico, Costa Rica, Malaysia, Jordan, Turkey and soon will be visiting South Korea. Over 260 international hosptials are now JCI accredited with a waiting line to be added to the list. My understanding is that there are three health insurance companies now making it available to their employees, UnitedHealth, Wellpoint and Cigna. The most readily accessible plans are the self-insured plans and the defined benefit plans better known as mini-meds or mid-level plans.
    So much more I could discuss but have little time. I look forward to other comments.

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  9. I wanted to drop you a quick note to express my thanks. I’ve been reading through your blog for a few days or so and have picked up a ton of excellent information as well as enjoyed the way you’ve structured your site. I’m trying to run my own blog however I think its too general and I need to focus more on smaller topics. Being all things to all people is not all that its cracked up to be.

  10. Having embarked on obtaining treatments via medical tourism, I have to say that I am a big fan. Yes, I do fall into the category of the under-insured. I can’t afford the mindblowing prices in the US for certain treatments, in my case, IVF.
    Previously, my situation was different. I was insured highly and did have some treatments within the US for more medical treatments. All I can say is that I noticed a world of difference in the way I was personally treated between the medical staff in the US and the medical staff in Thailand, where I went for my IVF. I am not saying that the staff in US hospitals are bad by any means, although I have run into more than one doctor who has seen my health as a business potential more than anything else. I think we can all do without that.
    Obviously, there are people out there who are going to take the vanity option when it comes to medical tourism. Cosmetic surgeries are cheaper in other countries and you get a vacation too. However, when it comes to reduced costs for life changing and life saving procedures, I’m all for that.
    I’d like to thank the health care professionals at Bangkok hospital and also Medbirds for helping us become a family.

  11. You make a good point about the quality care that foreign doctors provide. The care they provide is what is best for the patient rather than what the insurance company demands. There’s also the fact that in border countries such as Mexico, doctors routinely train alongside American doctors in medical schools and put that quality education to use in their native country. Americans are wise to look for the best healthcare available to them, no matter where that may take them.

  12. Nate,
    You reffered to breaking some law when providing preference to one provider over another. Could you tell me where I can read about the law?

  13. That’s exactly what I’m thinking Bob. I definitely agree with u. It is better for the Healthcare Insurance companies and the Employers to have a clear look in this regard.

  14. That’s exactly what I’m thinking Bob. I definitely agree with u. It is better for the Healthcare Insurance companies and the Employers to have a clear look in this regard.

  15. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

  16. Medical Tourism is become more and more popular thanks in part to medical tourism companies such as WorldMed Assist( http://www.worldmedassist.com/ ) who assist patients with finding affordable, high quality care abroad. WorldMed Assist only partners with hospitals after multi-day, on-site screening. Many of the top surgeons in their partner network were trained in the U.S., and most hospitals have affiliations with renowned US medical centers such as Johns Hopkins and Harvard Medical. Hospitals are squeaky clean, and their patients have rated their overseas accommodations as five star. See what their patients have to say: http://www.worldmedassist.com/medical_tourism_testimonials.htm

  17. Good points. I would like to push for medical tourism that is sustainable for the local people. In fact, we are conducting research on this topic and readers can visit our website to see our growing bibliography on sustainable medical tourism.
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    Westfield State College

  18. “The group is pushing for universal coverage through strengthened private/public partnership. The industry wants to expand access to Medicaid and the state Children’s Health Insurance Program”
    When did American’s decide let alone when where they asked if we want a handful of insurance companies running everything? AHIP is not the whole of the insurance industry, it is the favored portion of Ted Kennedy and other politicians but is still only a part. I have many issues with large dominate carriers, which supposedly is shared by most progressives yet your politicians are advocting turning everything over to them and for 4 decades given them favorable regualtion. If Congress would stop the mergers and break up the monopolies a number of our problems would be solved.

  19. not so sure I’d want to sit on an international flight for 10+ hours a few days after having major orthopedic surgery.
    Sounds like a DVT setup if there ever was one.

  20. “I could rail on BCBS for hours but at the end of the day they are a minut part of the insurance industry.”
    Not in this state. Nothing happens health legislation wise here without the blessing of BCBS, they are the largest carrier in the state, and I would imagine in many other states.
    “No carrier is big enough to prevent reform”
    That would be only if they acted alone, but they act through their association (AHIP) to lobby, etc. You might want to look at this: http://www.politico.com/news/stories/0708/11814.html

  21. I could rail on BCBS for hours but at the end of the day they are a minut part of the insurance industry. The insurance industry on a macro prospective initiates more reform then congress will ever pass. You have issue with large insurance companies, those are the same companies chosen by your politicians to run the system. There are thousands of small players that would love to bring down the large insurance companies but are prevented from doing so by politicians.
    No carrier is big enough to prevent reform, only politicians and regulation can. The impediment to reform is congress protecting their annointed ones. Just like anything else congress gets its hands on there is now a preferred winner and regardless of the harm it does to America congress will try to ensure it wins. This is why government controlled healthcare will never work, government always has its best interest in front of the publics.
    When have we not had corrupt politicians? Do you really want a William Jeffrson or Duck Cunningham type picking your insurance company or deciding what treatments you will be allowe?

  22. Nate, I figured same deductibles was long shot even though I was told (recorded converstion) by BCBS that they would pay. But there was no excuse for the 6 months of struggle to get valid reimbursement for legitimate claim. I won’t go into the whole story here but I owe NO apology to BCBS. I have worked (as a patient) in both the Canadaian system and the U.S. system and only have complaints with the U.S. system. Seems there was no “credentials” clause in my insurance contract for out-of-network. What I do suspect is this is more politics to support in-network providers. As I said the insurance industry is an impediment to reform not part of the solution.

  23. Peter,
    “I then spent the next 6 months fighting with BCBS to, 1. pay the same co-pays as in-network (didn’t happen) and 2. getting them to even reimburse me. My take was if they weren’t incompetent they were being intensionally obstructive to teach me a lesson about using out-of-network.”
    You would need to understand our current healthcare system and have worked in it to understnad why this is a problem. It’s very easy and counter productive to just blame the insurance company when you don’t get what you want instead of doing the research to learn why.
    Insurance Plans and PPOs have termindous liability in who they pay as PPO. Any incentive to be treated by one provider over another is steerage and creates legal liability to the Plan/PPO. As a claims payor and also someone who started and owned a PPO in the old days we would add any provider that accepted the contract. Then we started getting sued when those providers botched care. That is why all PPOs credential their providers now, if we add a doc that lost his license in another state or doesn’t have a license we are liable for anything that happens to any member that sees them. It’s very expensive to credential American providers, there is no way to credential every provider in the world.
    A number of insurers are already covering medical tourism expenses but only at accrediated facilities.
    Far from being the fault of evil insurance companies you need to go bark your comaplint up the trial lawyer tree. You really should apologise to insurance companies for your insinuation.

  24. My understanding is that medical tourism is used mostly by people without insurance. To get this used more you’d have to get insurance companies to give the same coverage to out-of-network providers who were same or cheaper than their in-network. I used Canada to get my cataracts done far cheaper than here. I then spent the next 6 months fighting with BCBS to, 1. pay the same co-pays as in-network (didn’t happen) and 2. getting them to even reimburse me. My take was if they weren’t incompetent they were being intensionally obstructive to teach me a lesson about using out-of-network. As usual the insurance industry is an impediment to reform.
    Why couldn’t the government contract with an offshore hosptial and fill a plane with Medicaid patients – that should save us some money.

  25. Great post, David. It’s my hope that, if nothing else, this forces payers and providers to get together a little more on health reform . . . there is still far too much incentive for both to hang on to the status quo.

  26. Bob: Great post. The number one problem with health care in this country is that it costs too much. Care is becoming unaffordable. It threatens our economic well-being to need medical care.
    It’s axiomatic that human beings will find a market for their needs, that enterprising people will come up with a way to allow “buyers” to find “sellers” and negotiate a price. If the dominant players here don’t like that, let them build better care organizations that can compete on price.
    I predict we’ll also see US Medical Tourism, that is, states where care is much cheaper will attract patients to their facilities. Not so exciting as India, perhaps, but Montana’s not a bad place to go for your knee replacement, right?
    Regards, DCK

  27. If the problem with the US Healthcare system is Insurance companies, multiple plans, and administrative burden how can an insurance comnpany not only afford to waive co-pays and co-insurance, fly the person to India, and then still save money?
    How can the providers in India afford to perform the same work, some say better, bill the same insurance companies, and provide additional services required to treat a tourist for a fraction of the cost.
    This seems like pretty clear proof the driver of high insurance rates is the high cost of healthcare. None of the popular reform proposals do anything to address that.

  28. Wow. Good quality care for a very fair price and excellent service to boot. What are these foreign docs trying to do — please the actual customer (patient)? What a concept!

  29. This is the only way to open up competition. If the medical faciltities are too busy or the wait times are too long, why not utilize the capacity available globally.
    We proposed a model long time ago at our blog on globalization which was to move less risky extensive cares to offshore and keep the primary care and emergencies here.

  30. Most of the medical tourism is still marginal at this point but there will be a tipping point. Off shore hospital-liners where US surgeons can work part-time or hopping across the Mexican, Canadian, or Caribbean borders in “health spas” are possible alternatives. Post Castro Cuba would be ideal setting. Will we have to sign a medical release with airlines to travel?
    Since there is a US shortage of general surgeons, when will we migrate for acute care and not just elective care?
    My questions about quality are never about the surgeons skill and training since most have trained in the US or Europe. My questions concerns the training and skills of allied health professionals. What happens with the tourist volumes increase beyond what Singapore and Mumbai can handle and the quality/quantity of the allied professionals drops. (Ever wonder who maintains the equipment?)
    Medical tourism is really a middle class issue,the poor don’t have access, unless Medicaid covers it. Medical tourism is a wake-up call to medical leadership to respond with system innovations needed to improve the value of American healthcare.

  31. Great post.
    I have always argued with libertarians that healthcare taken as whole is a too large and complex conglomerate with an extremely individualized and hard to standardize/evaluate output … but this is exactly the niche where capitalism steps in. The messy everyday stuff is handled at home, while the standardizable big ticket items that do not (per se) require continuity of care can be outsourced.
    That brings up an interesting question for cost savings in the US: if you could bring down the bills for standardizable big ticket items by means of competition (say, 20K instead of 32 K for a hip replacement), how much would you save? (not THAT much I would guess since these elective or semi elective surgeries in patients able to travel are only a fraction of overall health care cost).
    Another comment: medical tourism applies only to patients able to do significant air travel. Looks like medicare with its huge share of geriatric and multimorbid patients would not be able to participate to the degree that private insurance could.
    Last comment: surgeons do not need to make 500-900 K. US surgeons will be more competitive as soon as they make (still nice) 300-500 K salaries (that still facilitate paying back student loans), and as soon as they are not burdened with malpractice premiums that are designed to insure not only true negligence, but also the management of claims involving errors of judgment and claims without merit.

  32. Nice summary of the issues, Bob. Re: how do you ensure continuity of care, you can bet that entrepreneurs, whether US or off-shore, will solve that in a heartbeat. It wouldn’t be that tough to set up US-based “Post-off-shore Surgical Care Clinics” perhaps even subsidized by the same businesses that are incentivizing off-shore surgery. And for acute complications, well, there is always the ER.