Communities: Medical Travel
Medical travel poised to become a standard health care benefit
By Laura Carabello, Chief Creative Officer, CPR Strategic Marketing Communications
In the past few years, medical travel has drawn interest from the self-funded employer community and the nation’s health plans, sparking growth and, in the wake of health care reforms, promising to transform medical travel into a global and integrated health care system.
A forecast by Deloitte Consulting projects medical tourism originating in the U.S. could jump tenfold over the next decade, to nearly 16 million Americans a year seeking high quality, cost-effective procedures, from knee and hip replacements to prostate surgery and heart bypasses.
In 2011, Lowe’s Cos. and PepsiCo Inc. generated a great deal of buzz around domestic medical travel when both companies announced employees would have the option of traveling to Centers of Excellence for certain surgeries, fully covered with no copays or deductibles.
The biggest driver behind medical travel’s growing popularity, of course, has been skyrocketing health care costs. The HYPERLINK "http://www.kff.org/insurance/snapshot/OECD042111.cfm"U.S. not only spends much more per capita on health care, but also has had one of the highest spending growth rates, with both public and private health expenditures growing at rates that outpace comparable countries.
In contrast, medical care overseas is significantly less expensive – and efficiencies greater – than in the U.S. because of lower costs of living, real estate values and other factors.
For example: spinal fusion costs $16,000 in Thailand compared to $41,000 in the U.S.; an in vitro fertilization cycle in Turkey costs $9,500 compared to $15,000; and hip replacements in Malaysia cost $12,000 compared to $33,000.
Part of medical travel’s growing appeal for employers is it meshes well with health insurance, including limited benefit plans, preferred provider organizations and high-deductible health plans. Another attractive feature of medical travel is it offers a personal touch, from initial phone call to follow up – at a time when patient-centered, personalized medicine is coming into its own.
This year will bring increased momentum in the adoption of the medical travel health care benefit in response to increased corporate buy-in, demand for the specialty surgeries readily available overseas, expansion of the health savings accounts (HSA)s affiliate program to allow for travel expenses, and, coming full circle, increased inbound medical travel to the U.S.
The employer market has begun to embrace medical travel as a means of controlling health care costs and improving outcomes, particularly domestic medical travel for employees who feel more comfortable and safer traveling within the U.S.
During the past year, Lowe's paid for employees and dependents to travel to Cleveland Clinic for heart surgery. The procedure was fully covered by health insurance with no copays or deductibles, representing 234,000 employees and many more dependents covered by its self-funded health insurance plan.
Similarly, PepsiCo announced an arrangement allowing its employees to travel to Johns Hopkins Medicine in Baltimore for cardiac and joint-replacement surgeries, representing 250,000 employees and dependents.
To promote the medical travel offering among employees, PepsiCo developed a comprehensive communication program that included HR training, employee meeting presentations, a print enrollment guide mailed to the homes of all employees, and a promotional brochure. PepsiCo is positioning the benefit as one of the "exceptional extras" that PepsiCo provides employees.
Right now, the PepsiCo benefit provides care only at Johns Hopkins' Baltimore facility, but additional domestic and international care locations are a possibility for the future.
Centers of Excellence attract patients and employers alike by emphasizing quality, as well as by negotiating a single rate, which includes fees for surgeons, anesthesiologists and all medical care up until the patient is discharged. We can expect to see more such arrangements in the coming year.
As other major companies begin to recognize the cost-saving potential of medical travel, new partnerships will form, new benefit programs will be implemented, and never-before considered models for how to conduct business will take shape across many sectors of the industry. Likewise, more patients will overcome hesitation about traveling for care once they recognize the superior medical outcomes their colleagues are able to receive.
Employers, who send workers to high-quality hospitals, experience a 20-40 percent cost reduction, which is significant given hospital care spending rose nearly six percent last year.
As the dominoes fall, and more major companies begin offering medical travel to its workforce, the country will be in a better position to generate the level of improved outcomes and decreased health care costs that will have a positive impact on the overall economy.
For the 81 million Americans who are under- or uninsured, medical travel offers one of the few ways to receive surgeries and potentially life-saving treatments, with greater choice on a global scale in the form of unrestricted access to specialized care. Some of these procedures are associated with technology not available or a procedure prohibited or illegal in the United States. Additionally, there may be procedures not yet FDA-approved but are available outside U.S. borders, for example stem cell procedures or HIFU (ultrasound treatment for prostate cancer.)
A growing number of American couples are seeking fertility treatments in places like South Africa, Israel, Italy, Germany and Canada, where the costs can be much lower. The National Center for Health Statistics estimates about 10 percent of the childbearing population (or six million couples) suffer from infertility, a number that could increase if women continue to delay childbirth until later ages.
In the U.S., the average cost of a single in vitro effort is $12,400, and insurance usually does not cover the procedure. For many, cutting costs by traveling overseas will become an inevitable solution. Some concierge services, like PlanetHospital.com, search the globe to find the components for reproductive technology and international adoption on behalf of clients. Prospective parents often use an egg donor from one country, a sperm donor from another, and a surrogate who will deliver in a third country, which bypasses the laws controlling such methods.
Health Savings Accounts
As the number of people who have high-deductible policies paired with health savings accounts (HSA)s continues to grow, many individuals are becoming more cost-conscious about their health care. The money in an HSA to pay for medical and surgical procedures, including diagnosis, treatment and preventive measures, often qualify as tax-free.
Key expansion of the HSA affiliate program now allows these accounts to be used for travel expenses. This is significant, given that total coverage under HSAs in 2011 was 11.4 million, up 14 percent from 2010 (an 87 percent increase since 2008). In the past few years there has been a growing tie between HSAs and medical travel, opening up significant opportunities for both industries.
As more individuals begin to make this connection, and recognize the opportunity, traveling for medical care will become pervasive – and fueled each year by the nation’s shortage of about 160,000 physicians by 2025 – leaving too few to keep up with the flood of newly insured patients seeking care for long-neglected health problems.
In terms of accessing affordable care, places like Toronto, Vancouver and Mexico are likely to draw more Americans who will rely on their HSAs to finance the trip. It comes down to convenience and price. For many it will be a preventive care initiative, along the lines of obesity treatments and wellness programs, with the HSA money going for procedures that have not been traditionally covered by the employer program.
Inbound Medical Travel
Inbound medical tourism, in which patients travel from other countries to the U.S., is still booming and successful, and competition is heating up. Some U.S. hospitals are tightening their prices to compete against other U.S. hospitals attracting foreign patients, with many expanding their efforts.
In fact, some hospitals, such as NewYork-Presbyterian/Weill Cornell, Johns Hopkins and Cedars-Sinai Medical Center, now offer VIP amenities, featuring luxury surroundings, gourmet meals and even butlers, in a bid to attract wealthy patients from around the world.
Inbound medical tourism is predicted to exceed half a million patient travelers by 2017, according to a Deloitte Center for Health Solutions report. More than one year ago, the highest percentage of those patients (32 percent) were seeking oncology treatments, according to Stackpole & Associates, an independent research company.
Patients are traveling to the U.S. from:
Mexico -- 21.18%
Middle East -- 14.07%
South America -- 12.33%
Central America (excluding Mexico) -- 11.25%
Europe -- 11.23%
Russian medical tourists traditionally travel to Israel and Germany, accounting for 45 and 20 percent of patients respectively, but other destinations, such as Turkey, Singapore, Switzerland, France and Eastern European countries, are experiencing an increase in popularity.
Residents of Ukraine and Russia are choosing foreign clinics for reasons that include the continuing growth of medical costs in their homeland, and also concerns over low qualification of their doctors, which leads to uncertainty in the diagnoses and in the quality of the locally offered services.
The treatments most sought after by Russians include cardio surgery, organ transplantation, eye surgery, oncology and other chronic diseases, requiring advanced medical equipment and specialized after-care. In addition, Russian patients opt for treatment abroad for availability of treatments and language skills. At the moment, medical travel from Russia is considered prestigious, with the overall outbound stream at one percent of the population, but Russia has potential to become a big player in the outbound medical tourism market.
In the past year there were a number of acquisitions of medical travel facilitators, firms that work with health insurers, employers and individual patients to arrange medical procedures at their network of institutions in the U.S. and abroad. Each acquisition gives the industry a solid infrastructure to impact global audiences and is a strong indicator of medical travel’s robust future. Ultimately, medical travel has come of age. It’s no longer simply about traveling abroad for care, but about employers and individuals shopping around and finding the best medical options for their needs, no matter where they exist.
In the next few years, medical travel will have a direct influence on the status quo of U.S. health care, leading to more price transparency and accelerated reform at U.S. facilities. The rate of adoption will become exponential as more insurance companies and employers embrace medical travel and as the baby boomer generation continues to provide a high volume of patients searching for the best healthcare possible. Given these pressure points, combined with an increase in corporate buy-in, demand for specialty surgeries and medical travel to the US, 2014 looks like a plausible year for medical travel to become a standard option for many Americans.
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