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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.

Unpacking the Ingenix Settlement

Earlier this week, New York Attorney General Andrew Cuomo  announced a "victory" in his battle with the insurance industry over how out-of-network physician claims are paid. Cuomo had argued that the industry’s use of its out-of-network "customary and reasonable" database "defrauded" consumers and he sued the database’s manager, United Health’s Ingenix, over the controversy.

In a February 2008 post I said, "In a few months, we will hear that Ingenix paid a big fine and agreed to fix something (that no one will understand)  and Cuomo will have another notch in his belt."

Here’s how the settlement will work: Ingenix will pay $50 million to
set up an independent not-for-profit to operate the customary and
reasonable database. The industry gets to continue determining what
customary and reasonable
physician charges are through this non-profit and just exactly how they
do it will continue to be done by systems gurus the way systems gurus
do things–pretty much in a "black box." While an undetermined
university will operate the system, the industry, who will finance it,
will presumably have a great deal of input into
it. The industry’s use of the database will be more defensible since
one of its own is no longer arguably directly controlling the entity.

Continue reading…

“The Innovator’s Prescription”: Christensen’s Book Offers Insightful Dx, Unrealistic Rx

Ip Being big fans of Clay Christensen and his theory of disruptive innovation (DI), we have been awaiting his just-released book The Innovator’s Prescription: A Disruptive Solution for Healthcare .  The book is co-authored by Dr. Jerome Grossman and Dr. Jason Hwang.

We have mixed reactions.

The book is mistitled. It should have been titled “The Innovator’s Diagnosis”. The book does a fantastic job at diagnosis (Dx) of problems in the U.S. health care system. It presents many new, innovative analytical frameworks and lenses through which to view the U.S. health system.

However, it’s weak on prescription (Rx): many of the proposed solutions are speculative, ungrounded, and/or defy political reality.

We understand that the very nature of disruptive innovation implies inevitable resistance from organizations that benefit economically from the status quo. But at some point a proposed solution becomes so disruptive that you have to suspend reality to believe that it could be adopted or implemented — and many proposed solutions in this book enter that realm.

The book applies Christensen’s general theory of DI specifically to the health care system. It addresses questions such as:

  • What is DI?
  • Why is it important to create an environment in health care where DI can flourish?
  • How can we create the right environment in health care for DI to flourish?

The introductory chapter of the book is available here at no charge (right column under Downloads). It’s a great overview.

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Shocker–Karen Ignagni almost tells the truth

The NY Times’ Robert Pear has an article on the politics of the Obama Administration introducing a public plan as part of FEHBP.

As you might expect a boat load of Republicans who were told in grade school that private is good and public is bad are concerned about this causing the demise of private health plans–even though that would clearly benefit the country. Of course Pete Stark is quite happy to say that it’s not that Medicare underpays (as Charlie Baker said here last week), but it’s that private plans over pay.

So why is that the case? Well you knew that I couldn’t resist the appearance of my favorite lobbyist. Here’s what Karen Ignagni says, and — this is the shocker– it’s half true.

Karen M. Ignagni, president of America’s Health
Insurance Plans, a trade group, said the consolidation of the hospital
industry in the last seven or eight years had increased the market
power of hospitals, thereby reducing the ability of insurers to
negotiate discounts.

Actually it’s been more
like twelve to fifteen years since big players started merging (IFTF’s
Ellen Morrison wrote a great report about that in 1994 called "The Six Americas").
By the late 1990s Sutter, for example, was facing down Blue Cross of
California on price and winning. And of course in Boston Partners was
getting bigger and bigger, and facing down Blue Cross and the other plans. (Leading occasional THCB contributor and Beth Israel Deaconess CEO Paul Levy to become a big whiner, according to Partners Chairman Jack Connors). So Karen is telling the truth.

Continue reading…

Poizner: talks tough, wimps out WITH UPDATE

Previously in the long running retroactive insurance cancellation story I’d accused Steve Poizner (yes, the only Republican I’ve ever voted for and) California state insurance commissioner of being a bit soft. Now he really needs calling out.

Saint Lisa Girion reports in the LA Times today that to make up for cancelling 678 policies, Blue Shield, yes the warm cuddly pro-universal care loving non-profit insurer that’s not Wellpoint, has to reinstate them. Which means they have to reinstate the policies and pay the bills that they’d previously decided not to pay.

Now Blue Shield has been the most aggressive of all the insurers in the state in claiming that it had the right to retroactively cancel policies. Most of the others settled ages before. Meanwhile Poizner last year said this about Blue Shield:

Continue reading…

Jack says cover the uninsured & spend less!

It’s no secret what the Dartmouth group’s solution for the health care system has been — reduce practice variation, get surgery and physician resource use rates similar to the Mayo Clinics’ of the world, and take the huge savings that would be generated to cover the uninsured. In fact Wennberg, Skinner, Fisher & Weinstein, now joined by “gone native” journalist Shannon Brownlee, have a new White Paper out—their own open letter to Obama’s mob.

Along the way that requires demand-side reductions (achieved by shared decision making) and supply side changes.

Continue reading…

Now, Sleepless in San Francisco

Having returned from Seattle, the persistent itching from the sand-fly bites of Roatan has awakened me at 5 a.m. So I’m commenting on three pieces of news, which I’ve commented on before here and at Spot-On.

First, United HealthGroup has introduced two new things this week. One is is a consumer portal/WebMD competitor called myOptumHealth, which gave a sneak preview (and was a sponsor) at the Health 2.0 Conference in October.

At first blush I like the look of what they’ve pulled together, although the about us section doesn’t exactly tell you much about who owns Optum! But the really interesting product United launched this week was aimed right at me. It’s an option to repurchase your individual health insurance without being re-underwritten and rejected.

Continue reading…

Sleepless in Seattle

In a 36 hour span I left the mountains of Copa Ruinas in Western Honduras, had dinner in South Beach, Miami and after stopping off to see that Health 2.0 central in SF hadn’t collapsed, ended up in Seattle. I woke up early (had to get that in there to match the title) and hustled off to the main symphony hall because it’s the 25th anniversary of the Group Health Center for Health Studies. (The research arm of Group Health Cooperative of Puget Sound)

There the question of the day is, why haven’t integrated group practices (like Group Health & Kaiser) spread across the nation? And is there something that the new Administration can do to help make it so?

Continue reading…

Small Business Coverage: A Report from the Trenches

John Sinibaldi, a well-respected health insurance agent in St. Petersburg, Fla., has become prominent in Florida’s broker community because he counsels and services a large book of small business clients and studiously tracks the macro trends that impact coverage for this population. And he’s active in the state’s regulatory and legislative activities.

The other day I dropped him Jane Sarasohn-Kahn’s post that reported on International Foundation of Employee Benefit Plans’ survey showing that most employers still want to be involved with health care. John responded with a long description of what the small employers he works with are up against. It’s an illuminating, damning piece. I asked him whether I could post it, and he graciously agreed.

John notes that only 36 percent of Florida’s small businesses — employers with two to 50
employees – now offer coverage. This is significant because 95 percent of
Florida businesses are small. Nationally, about one-third of all employees work for firms with fewer than 100 employees.

The increasing pressure on small business may explain why, as I
pointed out the other day, even the arch-conservative National
Federation of Independent Business (NFIB) recently co-sponsored a
reprise of the Harry & Louise health care reform ads
. This time
it advocated for, rather than against, universal health care. Previously,
they were part of the coalition that killed the Clinton reform effort.

Finally, Mr. Sinibaldi’s message should drive home a key point, echoed by Shannon Brownlee and Zeke Emanuel in the Washington Post over the weekend and Bob Laszewski’s post yesterday.
To be successful, the expansive health care reform discussions that
typically dominate in Washington MUST go beyond the Massachusetts and
California reform efforts. Approaches
that can address waste and cost are just as important as those relating
to universal coverage. Otherwise the resulting solutions will continue
to be out of reach to a sizable portion of the American people,
and the underlying driver of the crisis, out-of-control cost, will
remain untouched.

Often the discussions on sites like this are dominated by people who understand health care’s problems deeply but abstractly. For John and his employers, buying health care is a stark, concrete problem that boils down to cutting care arrangements that are affordable for the employers and employees. As he describes it, it’s an increasingly impossible task.

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