"Healthcare outsourcing" is picking up among Americans

In its May 29th issue, Time magazine ran a full-length article dubbed "Outsourcing Your Heart: Elective surgery in India? Medical tourism is booming, and U.S. companies trying to contain health-care costs are starting to take notice."

The entire article is readable on Time's site (just click the link above), so I'll just post some of the highlights:

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 a lot more Americans than I expected flying to Asia for surgery through just one company. And that 83% figure surprised me since I had thought most surgeries done on Westerners abroad were cosmetic.

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.

Hospitals, like so many industries, is feeling heat from the "flattened world," a Tom Freidman term for globalization. And as if there weren't tremendous domestic cost pressures already. Put another way, "'This has the potential of doing to the U.S. health-care system what the Japanese auto industry did to American carmakers,' says Princeton University healthcare economist Uwe Reinhardt." Dr. Reinhardt (official webpage) is a big supporter of commercialized healthcare, as this blog entry states.

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.

Yet another instance of American companies being forced to find solutions to alleviate its own cost pressures from healthcare. And even some unique types of insurers are offering the option of "medical tourism":

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.

Why all this interest in "healthcare outsourcing" inside the USA, home of the most advanced healthcare system(s) in the world? Well, just check out the cost savings (in this rather group but legible -- I hope -- chart in Time's pages).



What's interesting is what hospitals abroad wanting to court Westerners are doing: seeking JCAHO accreditation, staffing themselves with American-trained doctors, and making attached hotel and restaurant complexes.

And Asia isn't the only place where Westerners are going for healthcare. People go to Mexico for dental work, and Europeans are flying to northern Africa as reported in a previous post.

This is how the Time article ends:

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.