Employers can save significant health care dollars by having employees seek overseas options
By Michael J. Moody, MBA, ARM
Affordable health care has become an oxymoron in the U.S. over the past 20 years or so. While the rate of inflation has remained in check for most of the U.S. economy, it has been increasing at double-digit numbers for health-related goods and services. While some progress has been made recently, it still outpaces the general inflation figures by 200% to 300%. As a result, employers, both large and small, have struggled to maintain cost-effective health coverage. The sad reality is that America now has over 45 million uninsured people.
Although a number of strategies have been employed to keep health care costs in check, little progress has been made. Despite innovative ideas such as consumer-driven health plans and wellness efforts, most employers at best are doing little but treading water. And those that start getting pulled under simply stop offering coverage to their employees, thus adding to the uninsured numbers. At this point, the prospects for meaningful relief are bleak. There is, however, one alternative that can offer some hope for real cost control.
One option for health care cost control that is beginning to gain attention is known as “medical tourism.” In essence, medical tourism involves U.S. citizens going abroad for some medical procedures. Initially, they would go on vacation and undergo some form of elective procedure such as cosmetic or dental surgery, thus combining surgery with a more traditional vacation. However, as the concept has matured, there is less emphasis on the tourism part and much more on the medical aspects. Over time, more complex procedures have been performed.
The early adopters of the medical tourism concept were typically Americans who had family or friends in the area where the procedures were being performed. Procedures were usually confined to minor surgeries that were excluded from a traditional health insurance program. However, the medical tourism concept has advanced rapidly over the past few years. It is estimated that 500,000 Americans traveled abroad to get medical treatment in 2006. Currently, it is estimated that medical tourism represents $20 billion worldwide and is expected to double to over $40 billion by 2010.
Why would a person consider going abroad for medical procedures? First and foremost, it’s the cost. According to Renee-Marie Stephano, legal counsel for the newly formed Medical Tourism Association (MTA), “Cost savings average about 60% to 80% of comparable procedures in the U.S.” In rare cases the savings may even be 90%. Certainly this is meaningful by any measure. And, as Jonathan Edelheit, president of MTA, points out, “Medical tourism is the only thing in health care that has hard dollar savings. If people actually start to use it, health care costs will start to go down.”
Admittedly, this option is not for everyone. Stephano, who also serves as the editor in chief of MTA’s monthly magazine, points out that it would have the most appeal for the uninsured/underinsured, and to date this has been the primary group to use the medical tourism option. But other groups will be interested as well, according to Edelheit. He believes that medical tourism can become a major influence on self-insured employers. “While there are only a handful of self-insured employers who are currently taking advantage of the medical tourism option,” he believes this is where the best utilization will come from. For example, with a $100,000 self-insured retention, “two or three catastrophic losses during the year could bankrupt a small employer.”
Edelheit notes that if employers could reduce those potential $100,000 losses to $20,000, for example, “they would probably actively consider that alternative,” particularly if the treatment is equal to or better than what is available in the U.S.
With those kinds of savings, most self-insured employers would be interested, but what about the employee? Stephano says: “Most employers are offering incentives for employees who are willing to go overseas for surgeries.” Among the incentives used, he says, are deductible and/or co-payment waivers, payment of travel expenses for both employee and accompanying family member, and in some cases even cash incentives.
Standard of care
Okay, the savings sound great, but employers and employees will want to know what types of procedures can be done, where the procedures can be performed and what kind of quality control is in place. Certainly, a large percentage of the procedures continue to be either cosmetic or dental, but the list of available surgery options is growing each day, Stephano says. Frequently, they are life-enhancing procedures such as hip or knee replacements, or hip resurfacing. Other life-enhancing surgeries are gastric bypass and laparoscopic surgery. However, there is a growing trend toward life-saving procedures such as coronary bypass surgery, heart valve replacement, pacemaker implantation and angioplasty. Also included in the life-saving group of procedures are organ transplants and non-approved procedures such as stem cell and fertility treatments.
Edelheit points out that the list of available locations has grown significantly over the past few years, and will continue to grow as more people see the advantages of medical tourism. One of the more popular locations for medical tourism is Bumrungrad International Hospital in Bangkok, Thailand. There are other Thai hospitals, as well as hospitals in Singapore, India, Hungary, Argentina, Turkey, Brazil, Costa Rica and the Philippines. Many other countries are in the process of establishing medical tourism facilities, often backed by intense government promotions for their destination.
Another major issue with regard to the viability of medical tourism is the quality of care that is being provided. Saving money is great, but no one will be interested if it is necessary to compromise with respect to the quality of care.
The first line of defense is to work with accredited hospitals. In the U.S., the primary accreditation body is the Joint Commission (formerly the Joint Commission on Accreditation of Healthcare Organizations). The Joint Commission also has an international section (JCI) that is responsible for similar accreditation procedures for offshore health care facilities. To date, the JCI has accredited more than 150 facilities worldwide and has a backlog of applicants for accreditation. The first objective, therefore, is to locate a JCI-accredited hospital.
Even more important than finding an accredited hospital is finding a qualified doctor. According to Stephano, “it’s all about the doctor. The key is to have confidence in your doctor.” The good news, she says, is that many of the doctors who practice at JCI-accredited hospitals are U.S. board-certified physicians. In fact, Stephano says that board-certified doctors are available at many international hospitals. She suggests that the proper sequence is “to find the right surgeon for your condition, then determine which hospital to use and finally consider the cost.”
How does one go about the task of finding a capable doctor and coordinating the trip? As in planning a traditional trip abroad, the best approach is to find a travel agent. Over the past couple of years, a number of specialized travel agencies have been established around the world; they cater to the needs of the medical tourist and assist patients in locating a qualified physician and then coordinating the entire event.
Because many of these travel agencies are new, Edelheit points out, finding one that is qualified can be a challenge. “This is where the Medical Tourism Association can assist,” he says. One of MTA’s missions is: “To provide a single source of information on medical tourism, outcomes of surgeries, and create a comprehensive Web portal for people to learn about medical tourism and affiliated hospitals.” Edelheit adds, “The MTA will serve as an objective conduit for information, which will allow patients to perform due diligence and make their own educated choices.”
Insurance industry response
The insurance industry is aware of medical tourism, and most insurers have chosen to take a wait-and-see attitude with regard to where the concept might fit into their long-term plans. Some exceptions are:
• OptMed Health/United Group Programs, Inc., has specialty programs for self-insured employers that offer Bumrungrad in its PPO network.
• Blue Cross/Blue Shield of South Carolina has established a subsidiary known as “Companion Global Healthcare,” which also includes Bumrungrad in its PPO network.
• Blue Cross/Blue Shield of California and Health Net of California both offer cross-border coverage for those who seek treatment in Mexico.
With the exception of the above-noted insurers, Edelheit comments, “Most carriers continue to monitor the growth of medical tourism, but have not made any specific plans to get involved.”
The trade press has noted the phenomenal growth in medical tourism over the past few years. The media have documented the fact that many medical destinations are making significant commitments to improve their facilities. Many offshore hospitals are either making major improvements or building new facilities that will cater to medical tourists. It is not uncommon to find hospitals abroad with “tourism wings,” with English-speaking personnel and special services tailored for Americans. New destinations are also springing up monthly. For example, Stephano points out that Dubai is in the process of constructing a new “medical city” that will be designed specifically for medical tourists.
All of these medical tourism activities can be a boon for mid-sized agents and brokers. While the current health insurance crisis is bad for all employers and their brokers, it is worse for mid-sized accounts. Most middle market accounts are not big enough to have much clout with a health care carrier, so they are forced to take whatever is available. This is where medical tourism comes in, Edelheit says. “It’s a new idea that can actually save hard dollars.” And for some small employers, medical tourism may make the difference between having a health plan and not having one. *
For more information:
Medical Travel Authority
Web site: www.MedicalTravelAuthority.com