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Home / News & IndustryManaged Care Insight and Analysis
Updated: Feb. 3, 2009
Medical Tourism A $2.1 Billion Business And Growing

More than 750,000 Americans left the country last year for less expensive medical treatments, with the number expected to grow to six million by 2010, according to a new report by the Deloitte Center for Health Solutions.

The growing trend of medical tourism represents $2.1 billion spent by Americans overseas for care, and $15.9 billion in lose revenue for U.S. healthcare providers.

The Executive Report on Managed Care and the Managed Care Information Center spoke with representatives from different aspects of the health tourism industry, including a spokesman from the Joint Commission International (JCI), experts on the health tourism industry and a health insurer now offering international treatment to ascertain the depth of the business.

"Medical tourism has been with us for awhile," said Ken Powers, spokesman for JCI, an international healthcare accrediting body. "Historically, the traffic pattern has been in our direction, but because of the high cost of U.S. healthcare, we are also seeing Americans seeking care in other countries where healthcare costs are much less."

Deloitte reported that by 2017, the number of outbound medical tourists is expected to rise to 15.75 million, representing a potential $30.3 to $79.5 billion spent abroad by Americans. Many times, uninsured or underinsured patients opt for less-expensive surgeries abroad. However, elective surgeries such as cosmetic or dental, often not covered under insurance plans, are also popular reasons to travel abroad.

"The cost spiral in the U.S. system has caused large numbers of consumers to go abroad just based on the cost differential," said Paul Keckley, executive director of the Deloitte Center for Health Solutions.

As the trend continues to grow, however, employers’ and insurers’ acceptance of global healthcare will help expand the options of millions of American workers.

"Now," said Keckley, "there are two drivers of medical tourism. As receptivity among employers and insurers increases, they will offer more international options. And as Western standards of medicine are implemented, now at over 10 major sites throughout the world, receptivity among patients will increase."

Keckley insists this is not a fad, but rather a trend that will continue to grow as acceptance of the practices grow.

According to John F.P. Bridges, assistant professor of health and policy management at Johns Hopkins University, alternative treatments unique to other cultures are also driving the trend.

"Health tourism, as opposed to medical tourism, is broader to include not just procedures. There’s a much bigger market for holistic care. Some people like to go home for cultural reasons, language reasons, etc. Because of internationalization, we all come from different places and that’s an ingredient in this trend," said Bridges.

An important marker in the beginning of the global healthcare trend came in 1998 with the creation of the JCI. It was created as a separate body of the Joint Commission on Accreditation, which has acted as an independent accrediting body in the U.S. for nearly a century. Between then and now, the JCI has accredited 176 healthcare organizations in 34 countries. They also provide information for patients looking outside the U.S. for surgeries and procedures.

"The mission of JCI is to improve the quality and safety of healthcare around the globe," said Powers. "Many of our hospitals tell us that they seek JCI accreditation because it helps them learn a common language, like that used by air traffic controllers, which ensures safety and consistency in the delivery of healthcare."

JCI has approximately 300 standards which hospitals must meet, Powers explained. By seeking accreditation, hospitals demonstrate a commitment to safety and quality by undergoing an independent review of their practices.

To help facilitate interaction between JCI-accredited hospitals and patients, BlueCross BlueShield of South Carolina created a wholly-owned subsidiary, Companion Global Healthcare, to cater to health tourists. Its mission was to set up a network of overseas hospitals accredited by JCI and provide networking and concierge services for BlueCross BlueShield members wishing to go abroad.

"We know that increasing numbers of our members, and Americans in general. are going outside of their standard benefit plans for various things that are health and wellness related. Creating a global surgery option for our members seemed like a logical next step," said Billy Quarles, representative for Companion.

Most experts agree that the recent growth in healthcare tourism has been driven by cost. The increasingly astronomical cost of domestic surgeries has led many uninsured to go abroad.

According to a study from the National Center for Policy Analysis, a heart bypass surgery that would cost between $95,000 and $200,000 in the US would typically cost just $10,000 in accredited hospitals in India, one of the most popular destinations for American patients.

Though there is agreement that cost is one of the most crucial factors, authorities disagree about the reasons costs are so high in the U.S. and so low in other countries for comparable procedures.

"In other countries," said Bridges, "the governments are paying for the hospital, there are wage differences, etc. Healthcare is an island economy. In the past, we haven’t allowed people to travel so there has been no change in prices at home."

Many sources, including Companion Global Healthcare, attribute the lowered cost to labor and malpractice expenses. In many other countries, doctors have lower fees and salaries and do not have to pay the same high rates for malpractice insurance. Bridges, who has traveled around the world studying healthcare trends, credits the cost discrepancy to the uneven relationship of list price and actual charge that exists between hospitals and insurers.

"What are insurers actually paying? We don’t know. We just see what they tell us the charge is, we don’t know what they actually pay. And that is definitely going on, we just don’t know to what degree," said Bridges.

Despite less expensive surgeries, there are challenges and concerns for those interested in partaking in the global healthcare trend, regardless of whether they are consumer, provider, or regulator.

"Be careful of middle men," recommended Bridges. "If a good is selling for $1,000 here and $100 somewhere else, it creates arbitrage opportunities to make money. People acting as middle-men are not to be trusted because of this arbitrage opportunity. There is too much money out there to be made. Deal with hospitals directly."

The JCI agreed that people must be vigilant when planing overseas surgeries. Finding accredited and respected doctors and hospitals should be a top priority, they said.

"Medical tourists can receive safe, quality care, but first they must research the physician and organization they are considering using," said Powers.

The implications for the future of healthcare are still unclear. Most sources agree that at this point, the health tourism market is too small to affect American healthcare significantly. However, the growth trend is clear and projected to continue for the next several years.

"At this time, it appears medical tourism is a growth industry," said Powers. "As U.S. healthcare costs soar, many Americans, particularly the uninsured and underinsured, are in search of institutions around the world providing quality, safe care for less cost,"

"As healthcare costs continue to rise for American companies," agreed Quarles.

"We expect to work with more and more who want to offer a global option to their workers," said Quarles. "We think that over the next three to 10 years, a significant number of Americans will be traveling abroad for major operations."

For more information on the Deloitte Center for Health Solutions, call (888) 233-6169 and for more information on Companion Global Healthcare, visit www.companionglobalhealthcare.com.

Addresses: Joint Commission International, 1515 West 22nd Street, Suite 1300W, Oak Brook, IL 60523; www.jointcommissioninternational.org. John Hopkins University, Bloomberg School of Public Health, Health Policy and Management Department, 624 N. Broadway, Rm 689, Baltimore, MD 21205; (410) 614-9851.


  This article was taken from:
The Executive Report on Managed Care

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