Medical Tourism: Why your HMO may send you to India for surgery

Would you fly to Turkey for a heart bypass operation? What if you could be assured that the facilities and staff were equal to or better than what you would find at home? What if, by doing so, you could put $15,000 in your pocket? This is the choice that many employees covered by HMOs or company health plans may soon face, as the price of procedures in the U.S. continues to climb.

You're probably familiar with the concept of medical tourism, traveling out of the country for procedures, as covered in magazines and on television, including a noteworthy story on Sixty Minutes. For years, the uninsured in need of cosmetic surgery or expensive operations have gone overseas for their needs. Also, an entire industry of Mexican dentists has been established along our southern border, treating Americans for a fraction of the cost back home. In the past decade, several changes have brought about a huge expansion in the field of out-of-country medical services.

I had the opportunity to talk with Steven Lash, President and CEO of Satori World Medical, about the changes in this market. Satori's global health network is an option in some group health care insurance programs offered by vendors such as AETNA. Satori works with hospitals around the world, including Mexico, Turkey, India, and South Korea.

Lash pointed out that in the U.S. we spend two to three times as much on health care as any other country in the world, yet we are 42nd in mortality. In our country, 71 cents of each healthcare dollar goes to personnel costs, vs. 18 cents in the countries where its hospitals are located. In 2007, according to a Deloitte study, 750,000 Americans left the native soil for medical procedures. It projects this number will reach six million by 2010.

One game-changing event in this field was the 9-11 tragedy. Lash told me that when the U.S. tightened restrictions on visitors, many foreigners who had been coming to this country for medical procedures were forced to look for alternatives. This demand provided the financial incentive to build new, state-of-the-art hospitals in other countries. Many of these hospitals are affiliated in one way or another with American hospitals such as the Cleveland Clinic and Johns Hopkins.

Still, I wondered, what would convince a patient to take a chance on a foreign hospital?

Lash said that it makes financial sense for the patient. He used this example -- an insured patient is told by his local doctor that he needs a hip transplant. Under the usual employee health insurance plan, the patient might end up paying $2,000 out-of-pocket to have the procedure done locally.

Alternately, the patient could choose the Satori option, in which case Satori would fly him and a companion, under the watchful eye of a nurse assigned to his case, to one of its hospitals, where the surgery would be performed. On release from the hospital, the patient and his companion would be put up in a nearby hotel until sufficiently recovered to travel safely. Once home, the local doctor would handle follow up.

If the patient chooses this option, he would pay nothing out of pocket (including nothing for his companion's expenses, which are also covered), and Satori would pay $10,000 worth of the patient's future monthly insurance contributions to his company plan. In other words, the patient comes out ahead $14,000. Rather powerful motivation.

Companies have a strong motivation to consider this option, for the same reason. When a procedure that costs $60,000 in the U.S. can be done for $20,000 in Mexico, the savings will also show up in reduced company insurance expenses. The Deloitte study offers an even starker comparison. For those procedures commonly performed, the weighted average was $10,629 in the U.S. vs $1,410 outside the country.

Why is surgery so cheap abroad? Along with lower pay for foreign doctors and hospital workers, another factor is litigation. Foreign hospitals operate under much different liability laws. For the patient, the loss of the ability to sue if something goes wrong can be a real negative. For the employer, however, it can be a plus, since it brings down the hospital's cost of treatment. The legal ramifications of this arrangement have yet to be fully fleshed out in court, and this advantage could be diminished by precedent-setting court decisions or new legislation. In the meantime, companies such as Satori routinely carry insurance that compensates the patient should the procedure go wrong.

Of course, going abroad for medical procedures is not an option if the patient is convinced he will receive second-rate care. The leaders in this field all claim that the hospitals in their networks have state-of-the-art technology and highly trained and qualified staff, with many American-trained doctors and other medical professionals. There are several organizations vying for dominance in accrediting hospitals internationally, including the U.S.-based Joint Commission International (JCI), but none stands out as the gold standard yet. Patients, therefore, have to be willing to take a leap of faith that the experience will match what the companies promise.

The type of procedures suited to this option are also limited. Obviously, emergency procedures don't fit this model, and patients unable to travel safely aren't candidates. The most common procedures currently performed include joint replacements, spinal fusion, bariatric surgery, fertility procedures, and heart bypasses. Most patients stay in-country for 14-17 days before returning home.

Lash expects the $2 trillion medical field to double in the next ten years, so there is plenty of money on the table to aggressively drive this industry. In case you were wondering, Lash told me he sees no chance that one of the largest U.S. health care insurers, Medicare, would ever pay for out-of-country procedures.

What are the industry's prospects? Certainly the financial incentive is there for the companies buying coverage, the employees taking advantage of it, and the companies offering the program. The number of Americans needing procedures is certain to increase in step with the boomer bubble.

Balanced against these factors, though, is our cultural bias. In the past decade, since 9-11 and its aftermath, Americans have become much more suspicious of foreigners, and increasingly angry at the offshoring of American jobs. Also, if employees sense that they are being forced into traveling overseas for surgery, they are bound to respond negatively. Therefore, companies, concerned about public perception, will be cautious about adding this option.

Another key is continuity of care, and the willingness of American doctors to work with overseas treatment centers. The patient, feeling extremely vulnerable, will note with anxiety even the slightest discord between the two.

My take? My hospital experiences in the U.S. haven't been particularly wonderful. I do like to be treated by professionals that speak English, and the likelihood of that is probably better in India than in my local ER. I consider personal attention important to the patient's comfort, and the CEO of the Medical Tourism Association told that the ratio of nurses to patients in these offshore hospitals averages one nurse per three patients, while in the U.S. the ratio is one in 10. I've sat with many a relative in hospitals where we didn't see a staff person for hours.

In the U.S., we've driven our health care costs so high that we can no longer afford enough staff to give patients personal attention, and that seems wrong to me. Perhaps the competition from these foreign hospitals will change the equation. I would be interested in talking with any of you who have gone overseas for a medical procedure. Please reach out in the comments to this post.

Ultimately, the best result is for our hospitals to offer competitive prices and treatment. If the only way to bring this about is to take a trip or two overseas, I'm willing. How about you?

Read Full Story