Thursday, February 26, 2009

Outsourcing Your Heart

Whiplash was just the first agony that Kevin Miller, 45, suffered in a car accident last July. The second was sticker shock. The self-employed and uninsured chiropractor from Eunice, La., learned that it would cost $90,000 to get the herniated disk in his neck repaired. So, over the objections of his doctors, he turned to the Internet and made an appointment with Bumrungrad Hospital , the marble-floored mecca of the medical trade that--with its liveried bellhops, fountains and restaurants--resembles a grand hotel more than a clinic. There a U.S.-trained surgeon fixed Miller's injured disk for less than $10,000. "I wouldn't hesitate to come back for another procedure," says Miller, who was recovering last week at the Westin Grande in Bangkok.

With this surgical sojourn, his first trip outside the U.S., Miller joined the swelling ranks of medical tourists. As word has spread about the high-quality care and cut-rate surgery available in such countries as India, Thailand, Singapore and Malaysia, a growing stream of uninsured and underinsured Americans are boarding planes not for the typical face-lift or tummy tuck but for discount hip replacements and sophisticated heart surgeries. Bumrungrad alone, according to CEO Curtis Schroeder, saw its stream of American patients climb to 55,000 last year, a 30% rise. Three-quarters of them flew in from the U.S.; 83% came for noncosmetic treatments. Meanwhile, India's trade in international patients is increasing at the same rate.

That's still a trickle compared with the millions of surgeries performed each year in the $2 trillion U.S. health-care system. But a significant shift is under way. It's one that could put greater competitive pressure on U.S. hospitals as some of their most lucrative patients are siphoned off. Elective surgeries are key moneymakers for hospitals, and even a small drop-off can cut deep into their profits.

What may accelerate the trend is that some pioneering U.S. corporations, swamped by rising health-care costs, are taking a serious look at medical outsourcing. Blue Ridge Paper Products of Canton, N.C., a manufacturing company, may soon offer employees outsourcing as a health-care option. The carrot? The patient would get to pocket some of the firm's substantial savings.

The calculus behind this interest isn't complicated. Many major employers in the U.S. are self-insured, which means they pick up the tab for much of their employees' medical care. That's why three major corporations that collectively cover 240,000 lives asked Dr. Arnold Milstein, national healthcare "thought leader" at the consultancy Mercer Health & Benefits, to assess the best places to outsource elective surgeries. Procedures in Thailand and Malaysia, he found, cost only 20% to 25% as much as comparable ones in the U.S.; top-notch Indian hospitals sell such services at an even steeper discount.

U.S. hospitals could certainly do with a little global competition. For years, their share of the national heath-care bill has grown at a rate far faster than inflation, and today they gobble up a third of all medical expenditures. At current rates, the U.S. will be spending $1 of every $5 of its GDP on health care by 2015, yet more than 1 in 4 workers will be uninsured. The ingrained inefficiency of most hospitals doesn't help. "A lot of them still don't know how to schedule their operating rooms efficiently," says Reinhardt. "They've never had to. They always get paid, no matter how sloppy they are."

That sloppiness, among other things, widens the price gap with foreign hospitals that entrepreneurs are exploiting. United Group Programs (UGP) of Boca Raton, Fla., a third-party administrator that sells a low-premium, bare-bones form of coverage called a mini--medical plan, this month began promoting Bumrungrad Hospital as a preferred provider to its customers. Employees of self-insured businesses who use the more conventional plans designed by UGP will also have access to the Thai hospital. This means that UGP offers the option of partly or fully covered medical tourism to some 100,000 people, including those who could use it most.

Mini-med plans are increasingly popular with contract and hourly workers, who are more likely than most other workers to be uninsured. But these plans are controversial because the buyers often think they cover more than they actually do. UGP's plans at best cap reimbursement for surgery at $3,000 and hospital stays at $1,000 a day. That would barely cover an afternoon in a U.S. hospital. But in Thailand, says Jonathan Edelheit, UGP's vice president of sales and marketing, a heart bypass that would cost its U.S. customers $56,000 could be had for $8,000.

Companies with traditional plans are also taking the initiative. Blue Ridge Paper, which makes the DairyPak brand of packaging, was carved out of the forest-products firm Champion International when its employees bought a few factories that were scheduled to close. But health-care costs are hurting the company. So a Blue Ridge team plans to visit hospitals in India to assess their quality of care. If it gives the green light, Blue Ridge will begin promoting the option to its 2,000 workers.

Employees who opt for India would get to take along a family member, says Darrell Douglas, vice president of human resources, and the whole experience, including a recuperative stay at a hotel, would be covered. IndUShealth, a medical tourism start-up in Raleigh, N.C., will make all arrangements and coordinate care between U.S. and Indian providers. The sweetener: the company will share with these intrepid employees up to 25% of savings garnered from the outsourcing.

Get a new hip--and a rebate. Sounds like a bargain, but would people actually travel 10,000 miles for medical care just to make a few bucks? You bet. Polls commissioned by Milstein suggest that few consumers would opt for surgery abroad for incentives below $1,000. But raise the ante above $1,000, and the equation changes. Among people who have sick family members, about 45% of the underinsured or uninsured declare they would get on the plane; even 19% of those who have insurance say they're game. Above $5,000, the percentage of takers climbs to 61% and 40%, respectively.

State governments, which tend to offer generous health-care benefits, may find those numbers appealing. A bill in the West Virginia legislature sponsored by delegate Ray Canterbury outlines incentives for the public employee health-insurance program that are similar to Blue Ridge's. Hospital administrators attending the legislative session when the bill came up for a hearing in February nearly gagged, says Canterbury: "They were not happy. But I didn't expect them to be. The point is to make them face competition."

Is the quality of care in foreign hospitals high enough? To cater to an international clientele, many private hospitals abroad are applying for accreditation (many of them successfully) from the Joint Commission International, the global arm of the institution that accredits most U.S. hospitals. Many of the tourist hospitals teem with surgeons who have trained in the U.S. or Britain, which is a great comfort to American patients (the irony is that 25% of physicians in the U.S. got their M.D.s abroad). Escorts Heart Institute and Research Center in Delhi, for instance, was founded by an authority on robotic cardiac surgery, Dr. Naresh Trehan, formerly of New York University.

Things have not gone as Steinard expected. When surgeon Pradeep Chandra scanned Steinard's angiogram last week, he found the artery 90% blocked. "A stent is out of the question," he told Keigans. "Your father is going to need a double bypass, and he needs it immediately." The blood drained from Keigans' face. While she loved their plush hospital suite and the staff had been superb, this was all happening too far from home. Steinard, though, was blunt about his choices. It's either this, he said, or a fatal heart attack back home. The surgery last week was successful; the hospital's bill: $6,650.

"I'm not sure I'd ever want to come back to Delhi," says Keigans, "but I'll be telling everyone I know to come here if they need surgery. It's not just the price. They've made everything so easy for us."

Yet India is a developing country, and this can shake the confidence of even the most cavalier patient. First-class hotels are in short supply. Beyond that, the country's crumbling infrastructure and shocking income disparities--children pick through the garbage outside Steinard's hospital--make medical tourism seem a tad too adventurous for many. And for the litigious minded, good luck. The country's malpractice laws limit damage awards, one of many reasons that health care in India is cheaper.

But people don't have to be in Steinard's--or Miller's--straits before they cross borders for care. Retirees, especially the snowbirds who winter in South Texas and Arizona, have turned Mexican towns like Nuevo Progreso (pop. 9,125; dentists, 70), in the Lower Rio Grande Valley, and Los Algodones (pop. 15,000; doctors and dentists, 250), near Yuma, Ariz., into dusty dental centers. Los Algodones might rake in as much as $150 million during the winter season. People from Minnesota and California arrive in chartered planes to get their teeth fixed in these dental oases. Two California insurers, Health Net and Blue Shield, for the past few years have marketed popular health-insurance plans, aimed at Latinos, that charge lower premiums and cover treatment on both sides of the border.

Mexico's medical industry is just beginning to bubble; India's, like its other outsourcing segments, is booming. Apollo Hospitals, one of the largest private chains in the world with 46 hospitals in three countries, and Wockhardt Hospitals Group, which has eight hospitals in India, are working through agencies like MediTravels, IndUShealth, PlanetHospital and the Medical Tourist Co. in Britain to build business across the West.

Trehan plans to launch next year, in partnership with GE, the first installment of a vast, $250 million specialty Escorts hospital complex near New Delhi that will feature luxury suites, a hotel and swank restaurants for patients and their families. "We will be the Mayo Clinic of the East," he says. Max Healthcare is also planning a specialty complex in New Delhi (fields: neurologic, orthopedic, ob-gyn and pediatric).

A corresponding boom is taking place among Western agencies that funnel patients to Asia. Eight have popped up in Canada, where national health care can mean a yearlong wait for elective surgery. In the U.S. several firms are aiming at the roughly 61 million people who are uninsured or underinsured.

Will U.S. insurers join the party? Mohit Ghose of the trade group America's Health Insurance Plans says many have taken note of medical outsourcing but are scared off by the regulatory and legal uncertainties. Aaditya Mattoo, a World Bank economist who has published a study on the potential of medical outsourcing, suspects that pure institutional inertia has something to do with the lack of interest.

Yet as the medical-cost crisis deepens, the corporations who pay insurers are likely to find the lure of outsourcing as irresistible in health care as it is in software.


With no health insurance and lacking $60,000 for a badly needed operation, Steinard, a 59-year-old Floridian, hopped onto the Internet and then onto a plane to India 8,300 MILES LATER, IT'S FIXED... and found out that he was closer to a heart attack than he had imagined. Steinard had a double bypass last week in New Delhi, where he is recovering CUTTING-EDGE VACATIONS In the U.S. insurers negotiate discounts, but the uninsured pay retail rates for medical procedures. Here's how the prices of one surgical tourism agency compare. Its packages include airfare and hospital and hotel rooms, but costs can climb if there are complications.

Procedure U.S. Insurer's cost U.S. Retail price India Thailand Singapore

Angioplasty $25,704 to $37,128 $57,262 to $82,711 11000 13000 13000
Gastric bypass $27,717 to $40,035 $47,988 to $69,316 11000 15000 15000
Heart bypass $54,741 to $79,071 $122,424 to $176,835 10000 12000 20000
Heart-valve replacement (single) $71,401 to $103,136 $159,326 to $230,138 9500 10500 13000
Hip replacement $18,281 to $26,407 $43,780 to $63,238 9000 12000 12000
Hysterectomy $9,591 to $13,854 $20,416 to $29,489 2900 4500
Knee replacement $17,627 to $25,462 $40,640 to $58,702 8500 10000 13000
Mastectomy $9,774 to $14,118 $23,709 to $34,246 7500 9000 12400
Spinal fusion $25,302 to $36,547 $62,778 to $90,679 5500 7000 9000

Thursday, February 19, 2009

Medical Tourism: The Insurance Debate

Most insurers balk at covering medical procedures performed overseas, but some are exploring the option.

A room at Bangkok Hospital Phuket. 1.5 million medical tourists traveled to Thailand in 2007. Thailand Ministry of Public Health

Twenty years ago, an American needing knee surgery probably wouldn't think of jetting off to India for the operation. But times keep changing, health insurance costs keep rising, and Kumar Jagadeesan can cite a statistic that has led many patients to jump aboard a plane.

"A knee surgery operation in the U.S. can cost $45,000 to $50,000," says the vice-president and CEO of MediTravels, a medical travel company. "In India, the cost would be $10,000, plus the price of a plane ticket," which could be as little as $1,330 for a round-trip.

MediTravels is one of several medical travel companies advertising inexpensive services where patients fly to India, Thailand, the Philippines, and other countries to have surgery. With a few notable exceptions, however, insurance companies aren't eager to cover these trips, even while they acknowledge the cost savings may be great. So for now, most patients must put up their own cash or put down a credit card.

Worries About Credentials

Why are insurers reluctant to send policyholders overseas? "One of the biggest issues is credentialing claims," a lawyer with the global law firm Squire, Sanders & Dempsey. "They have to take reasonable measures that the providers overseas have the credentials to provide adequate care."

Most medical travel companies, including MediTravels, currently rely on the Joint Commission International (JCI), an American nonprofit that accredits hospitals in the U.S., to help find suitable medical centers overseas. Lately the number of international hospitals getting the thumbs-up from the JCI has been growing. "There is great potential for growth, which is being driven by the buildout of high quality hospitals on the global scene," says Josef Woodman, the author of Patients Beyond Borders. Kenneth A. Powers, the JCI's media relations manager, said that in 2005, there were just 76 JCI-accredited hospitals. Now there are more than 220.

JCI accreditation will probably help insurers overcome fears of getting sued by injured patients. But there are other issues to worry about. The insurers "have to make sure there will be smooth claims processing," says Woodman. And, he says, there are concerns about continuity of care. "What happens when the patient comes back? Even if there are no complications with a procedure, how much is the insurance company willing to cover for physical therapy back in the U.S.?"

Few Legal Options

Despite these lingering issues, a few insurers have been bold enough to dip their toes into medical tourism in the past year. In March 2008, Blue Cross & Blue Shield of South Carolina signed alliances with seven overseas hospitals (BusinessWeek). And more insurers are in talks with medical tourism companies, attests Rudy Rupak, founder of the medical travel agency Planet Hospital. "Right now we're having active discussions with insurance companies about adding us to their plan design," he says.

Getting more insurers involved might help ease patients' reluctance to fly to another country for a procedure. But lack of coverage is not the only deal-breaker. "What happens if there's an adverse effect?" asks Edelstein. "Will they have any recourse? That's a very hot area in the legal arena. For the most part, those patients are not going to have much recourse in the U.S."

Nor will patients have many legal options in the country where they had the operation. "Access to the court system in countries like India is not as good as in the U.S.," Edelstein adds. "And even if you do get a trial, the judgments tend to be much lower than they would be in the U.S.""

Nevertheless, Woodman and others are optimistic about the changing world of medical tourism and the role of health insurers. "When you think of medical tourism 20 years ago, you picture the Beverly Hills crowd of upper-crust men and women going to Brazil for a procedure and coming back home to brag about it," says Woodman. "The profile has changed. It's becoming a middle-class and working-class phenomenon, where folks are being driven to seek cost-effective alternatives."

Friday, February 13, 2009

Medical tourism flourishing in Philippines while U.S. health care costs skyrocket

The Health Undersecretary of the Philippines -- Jade del Mundo -- recently stated that the bustling medical tourism program of the Philippines is allowing new doors to open in the nursing field, adding that the current multi-million dollar medical tourism program would be expanding in the provinces of the Philippines next year.

Medical tourism is a rapidly growing industry in the Philippines, with prominent hospitals in metropolitan Manila like St. Luke's Medical Center, Asian Hospital, Medical City, Makati Medical Center, Capitol Medical Center, Lung Center, Philippine Heart Center, National Kidney and Transplant Institute, Philippine Children's Medical Center and East Avenue Medical Center affiliated with the program.

Along with such rapid growth comes a need for skilled nurses. Health Undersecretary del Mundo indicated that "there will be no discrimination" in the hiring of nurses to serve the bustling growth in the medical tourism industry. He also said that top government hospitals in the provinces -- particularly in the Central Luzon, Baguio, Cebu, Iloilo and Davao provinces -- will soon be joining the medical tourism program as well.

Hospitals operated by the Filipino government plan to provide proper training for all new nurses. These hospitals are attractive to foreign patients because of lower costs on surgical procedures, in addition to being located near popular tourist locations in the Philippines.

For example, hospitals in Bicol, Cebu and Davao have been offering surgical procedures such as the coronary artery bypass graft at a cost of only $10,000, about half of the typical cost in countries outside the Philippines. A more extreme example would be a kidney transplant, which is available in Davao and Cebu hospitals at a cost of $60,000. This same procedure could cost $140,000 in other countries.

With health care costs in the U.S. rising every year at a rapid rate, more and more Americans are looking to countries like the Philippines to have medical services performed. In 2004, total national health expenditures rose 7.9 percent, which was over three times the rate of inflation. Total health care spending reached $1.9 trillion in 2004 -- or $6,280 per person -- and represented 16 percent of the gross domestic product (GDP) of the United States.

Thursday, February 5, 2009

Top 3 Medical Tourism Destinations

Medical Tourism

Medical tourism is a rapidly growing global industry that combines travelling and obtaining health care into one practical and convenient journey. In other words, it involves the undertaking of a trip for the purpose of receiving medical treatment or procedures that would otherwise be inaccessible or unavailable. Most of us know that health care in the US is in crisis. Health care cost in America is reaching all time high of about $2 trillion per year, which is 16% of the GDP, four times the expenditure for national defense. US is ranked 15th in health care performance by World Health Organization, globally, life expectancy ranks 22nd in world and infant mortality ranks 39th. US leads the most when it comes to health-care insurance spending, when compared to any other nation, yet 46 million Americans are without insurance and this number increases every year. Kaiser Family Foundation reports that between the years 2000 and 2004 the number of uninsured Americans increased by 6 million. The out-of-pocket costs for insured have nearly tripled in last six years and health-care premiums continue to rise at nearly three times the general inflation rate. In addition, unpaid and unpayable healthcare bills account for the majority of all personal bankruptcies in the country.

On the other hand, there has been much news recently about the high-quality care and cutting edge surgery available in countries such as India, Thailand, Singapore and Malaysia, a growing stream of uninsured and underinsured Americans are boarding planes not for the typical face-lift or tummy tuck but for discount hip replacements and sophisticated heart surgeries. By looking at options outside the American health care system those who lack adequate insurance can get medical care at significantly lower prices which is often referred to as medical tourism, seeking medical care outside the United States is an idea that is taking off at new levels.

Where Can Medical Tourism Take You?

Top 3 Medical Tourism Destinations

1. Malaysia

Malaysia’s medical tourism industry has seen staggering growth over recent years. The number of foreigners seeking healthcare services in Malaysia has grown from 75,210 patients in 2001 to 296,687 patients in 2006, according to the Association of Private Hospitals Malaysia. The large volume of patients in 2006 brought approximately $59 million in revenue. The Association of Private Hospitals Malaysia projected that the number of foreigners seeking medical treatment in Malaysia will continue to grow at a rate of 30 percent a year until 2010.

Malaysia offers a wide array of medical procedures—including dental, cosmetic and cardiac surgeries—at significantly lower costs than in the U.S. In Malaysia, cardiac bypass surgery, for example, costs around $6,000 to $7,000, according to a publication released by Tourism Malaysia last November.

2. Costa Rica

Costa Rica has become a popular destination among North American patients for inexpensive, high-quality medical care “without a trans-Pacific flight,”. The convenience of travel has made the country a particularly attractive destination for American patients, as Costa Rica can be reached from most U.S. cities within seven to 10 hours of flight time.

Around 150,000 foreigners sought care in Costa Rica in 2006, according to the NCPA report published last November. Often, foreign patients travel to Costa Rica for the low costs of dental work and plastic surgery. Costs of procedures in Costa Rica are generally less than half the cost of the same procedures in the U.S.; the price of a dental veneer, for instance, is approximately $350 in Costa Rica, whereas the same procedure is $1,250 in the U.S.

The Costa Rican government seems to be taking steps to further encourage foreign investment in the country; in October 2007, a national referendum voted in favor of the U.S.-Central American Free Trade Agreement (CAFTA). Successful implementation by March 2008 should result in an improved investment climate.

3. India

India has the lowest cost and highest quality of all medical tourism destinations, according to a report on medical tourism published by the National Center for Policy Analysis (NCPA) last November. Several hospitals are accredited by the Joint Commission International (JCI) and utilize highly trained physicians and cutting-edge medical technology.

The medical tourism sector is experiencing rapid growth, with approximately 500,000 foreign patients traveling to India for medical care in 2005, compared to an estimated 150,000 patients in 2002, according to experts quoted in the University of Delaware’s UDaily news. In monetary terms, experts estimate that medical tourism could bring India as much as $2.2 billion per year by 2012.

India has become a well-known medical tourist destination for cardiac and orthopedic procedures. In the past, American patients have traveled to India for procedures such as Birmingham hip resurfacing, which was previously unavailable in the U.S., and has only recently been FDA approved. Medical tourists also journey to India for procedures that carry high costs in the U.S.; for example, Apollo Hospital in New Delhi charges $4,000 for cardiac surgery, while the same procedure would cost about $30,000 in the U.S.

Although India has taken significant steps to becoming the “global health destination” envisioned by Finance Minister Jaswant Sing in the country’s 2003 budget, the country still faces problems such as overpopulation, environmental degradation, poverty and ethnic and religious strife. Such problems may dissuade some patients from traveling to India to receive healthcare.