Employee Benefit News

Medical Tourism: Prepped for take-off but still grounded

Large self- insured employers are taking the lead in exploring medical tourism, and today, a growing number of carriers are testing the waters too.

Robert Grant, the CEO of VoyaCare, Inc., personally researches overseas hospitals. His company, VoyaCare, provides medical tourism options to beneficiaries in self-funded health plans.

Recently, Grant booked a physical in the Wellness Center of Bumrungrad International Hospital in Bangkok. During the physical, an issue arose concerning his eye. Rather than waiting a week or more to see a specialist, Grant saw a specialist the same day.

That doctor confirmed the diagnosis, and sent Grant to another specialist to perform a procedure. That specialist administered two tests and performed the procedure to correct the problem, still in the same day. The grand total, says Grant, was $650.

In coming years, more and more U.S. patients will head abroad for medical care, say proponents, because of cheaper, more attentive medical care. Proponents claim that one day Americans will actually prefer going abroad for medical care, just as they now prefer foreign cars over American brands.

But that future is murky. While medical tourism has been a concept poised on the brink for at least the last decade, it's never really taken off.

In 2007, only 750,000 Americans traveled abroad for medical care, according to a 2008 report by Deloitte's Center for Health Solutions in Washington, D.C. That number is projected to increase to just 1.6 million by 2012. Conversely, in-bound medical tourism (foreign patients coming to the U.S. for medical care), is predicted to be 561,000 by 2017.

The number of Americans going abroad is low because, until recently, medical tourism was largely limited to uninsured people having non-emergency surgery or dental procedures. Patients looking for a deal on cosmetic procedures, such as face-lifts, liposuction, or breast enhancement, also made up the ranks of those willing to leave the country.

But those low ex-pat patient numbers can head up if American employers and insurers begin underwriting and actively promoting medical tourism in significant numbers, say experts. There are plenty of signs that they are thinking about it.

Self-insured plans are expressing the most interest, because employers that self-insure can feel the direct impact of the cost savings, explains Stephano. But a growing number of insurers have signaled that they may be willing to underwrite medical tourism and are cautiously testing the waters as well.

UnitedHealth, Aetna, Anthem Blue Cross and Blue Shield of Wisconsin, United Group Program in Florida, Blue Shield and Health Net in California, and Blue Cross and Blue Shield of South Carolina, have launched medical tourism pilots.

For the most part, insured plans offering medical tourism are still in the pilot stage, says Renee Marie Stephano, president of the Medical Tourism Association in West Palm Beach, Fla. Insurers, she says, are working with a limited number of plans and a limited number of employees to test the waters.

For example, Aetna has a pilot project and is working with New England supermarket chain Hannaford Brothers, she says.

Cost savings are key

The biggest driver of the interest in medical tourism is cost savings. The cost differential between having work done in the U.S. and other parts of the world can be substantial, says Paul Keckley, executive director of the Deloitte Center for Health Solutions.

According to data from the Medical Tourism Association, a heart bypass operation that could cost $144,000 in the U.S. would be $8,500 in India, $24,000 in Thailand or $25,000 in Costa Rica. A $170,000 heart valve replacement in the U.S. would cost $1,200 in India, $10,450 in Columbia, or $13,500 in Singapore.

And, proponents claim, it's not only cheaper, but the technology is equivalent to that in the U.S., and often better. Furthermore, foreign doctors often have more experience with some procedures, says Grant.

For example, hip resurfacing, which doctors here have only recently begun to perform, has been done by doctors abroad for years.

Additionally, some foreign health care facilities are also often newer and more modern - often resembling a luxury hotel or upscale mall, says Grant. Foreign hospitals, such as Bumrungrad, are world class and have all the latest state-of-the-art technologies, he says, and may be superior to many local hospitals.

The care is also more attentive. For example, says Grant, at Apollo Hospital in New Delhi, if you go for a physical, the test is administered by a doctor, not a technician, so results are interpreted immediately.

If you go to India or Thailand, and you need to see a specialist, you get one immediately with no wait, he says, and, patients can often hire their own private nurses for as little as $50 a day.

But the uptake has been tepid at best. As the above numbers show, very few Americans actually venture abroad for medical care. While Voyacare has been around since 2006, the firm only services three groups and very few employees utilize the benefit, admits Grant.

American attitudes

The biggest factor for the reticence is American attitudes. A 2009 Deloitte survey indicates that health care consumers do not like the idea of traveling for their medical procedures.

Of the consumers surveyed, only 9% said they would travel outside the U.S. for a surgical procedure if they could save 50% or more. Another 67% indicated they were not likely to travel outside the country for a necessary procedure, and 69% said they were unlikely to travel outside the U.S. for an elective procedure.

There is still a lot of prejudice among Americans regarding other countries' health care, says Grant. If you ask people if they would rather go to a downtown hospital and pay $10,000 for a procedure, or go to Mexico and pay nothing, most would still pay, he says.

Older employees, in particular, he says, are the least accepting. "It's not something that people over 55 would consider. It's generational," says Keckley. Younger employees, particularly those in Gen X and Gen Y, are more receptive to the idea of traveling for medical procedures, he adds.

Organized labor is also resistant to the idea of sending workers abroad for medical care. The AFL-CIO has signaled that it is against medical tourism. A headline on their Web site reads, "First Employers Sent Your Job Overseas. Guess What? You're Next."

The union argues that medical tourism only proves the need for comprehensive health care reform here in the U.S. It is Grant's opinion that the Teamsters are not on board primarily because they mistrust management.

Other impediments

Companies also worry about potential liabilities if there's some form of malpractice, notes Grant. The legal systems in India and Thailand, he notes, are not as patient friendly as they are here, so patients might seek recourse against their employers if something goes wrong.

"Everyone is worried about who's going to sue whom if a procedure goes badly," he says. However, he says, insurance products are being developed to cover the risk - which should help alleviate the problem.

Another impediment is size, particularly for self-insured plans. Grant believes that a self-funded plan should optimally have at least 2,000 employees for the economies to work. Voyacare negotiates a per person, per month charge to provide its services.

When you consider utilization, plan sponsors need enough employees in the plan to justify the additional expenses that a medical tourism program entails, he says. According to Grant, approximately 10% of eligible employees take advantage of medical tourism benefits.

That means that if 100 people need hip replacements, only 10 would go overseas to get the procedure. The other reality is that big procedures that cost $40,000 or more do not occur that frequently, says Keckley.

Signs of a good fit

Size, however, can be ameliorated by other factors. Employee demographics that would suggest a high utilization of orthopedic or elective coronary could be an indicator that an employer is a good candidate for a medical tourism program.

Thus, a 500-member group could still sponsor a medical tourism program, notes Grant, if, for example, participants worked in heavy industry or were older demographically. These types of populations would likely utilize a lot of orthopedic surgery.

A group that includes a lot of immigrants would also be a good fit, notes Keckley, because immigrants are more likely to travel back to their own country for procedures. Immigrant workers will combine having medical work done with a visit home, he notes.

Some insurers are seeing the benefits of highlighting medical tourism to groups with large numbers of immigrants. For example, Blue Shield and Health Net of California's foreign medical site is in Mexico and is focused on employers that hire a large number of Mexican immigrants.

In the next few years, more employers, both insured and self-insured, will offer medical tourism as an option, says Keckley - not only because of the cost savings, but also to put pressure on local providers to manage their costs. Hannafords initiated its medical tourism program, in part, to put pressure on local health care providers, notes Stephano.

Advisers at this time should be discussing medical tourism with their clients, says Stephano, letting them know what options exist and educating them about the opportunities. Data suggest that benefit plans can save between 40% and 50% of their previous expenditures on health care, says Grant.

If a group decides to embark on medical tourism, says Grant, then a number of steps have to be taken.

ERISA language needs to be developed to explain the benefit. Benefits staff have to be informed and trained. A support person should also be made available 24/7 to help employees utilize the benefit. Employers wanting to promote medical tourism also have to educate their employees about the quality of care in other countries, says Stephano.

Domestic medical tourism impact of the Patient Protection & Affordable Care Act

While U.S. workers show a distinct unwillingness to travel outside the U.S. for medical care, they are willing to travel within the U.S. Firms are now helping employers to save money through domestic medical tourism.

As with foreign medical tourism, the cost savings can be significant, between 30% and 80%, says Alex Sanchez, managing director of Healthcare Concierge Services in Miami.

Healthcare Concierge Services helps self-insured plans obtain package prices for their employee/members at domestic medical facilities. For example, it works with Aon Consulting to provide services to its clients' members.

Healthcare Concierge Services realized two years ago that it could achieve savings within the U.S. comparable to rates charged outside the country, says Sanchez. His firm works with 40 facilities in the U.S. "We get the same rates for procedures as those in India," he says, "but patients have the peace of mind of being in the U.S."

HCS does all the logistics, including flights and hotels, and provides employee/members with three options at three different facilities for procedures such as hysterectomies.

Once they arrive in the destination city, HCS provides patients with an "escort" (a representative from HCS) to help them navigate the system. Generally, he says, the benefit is set up as being free to the employee if they agree to use the program, covering all the normal out-of-pocket expenses.

While HCS has no general utilization numbers, Sanchez says it generally handles 25 patients a week for the 30 to 60 plans it covers.

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