The U.S. Employer's View of Medical Travel

Rick Johnson, for HealthLeaders Media , September 23, 2008

U.S. employers and consumers alike are feeling the pressure of a down economy, and the cost of healthcare isn't providing any relief. One recent bright point, as I noted in last week's column, comes from the news that the Hannaford Bros. Co., a Scarborough, ME-based supermarket, parlayed the medical travel benefit it began offering to its employees early this year into competitive offers from some U.S. healthcare providers.

I caught up with Peter Hayes, director of associate health and wellness, to ask a few questions about Hannaford's entrance into global healthcare and how that has improved the company's dialog with regional healthcare providers.

Rick Johnson: Can you give us a little background into how Hannaford's developed its medical travel benefit?

Peter Hayes: We were concerned about the healthcare value equation here in the U.S.-that is, the cost and quality equation here. Last year, I read a Reader's Digest article that compared medical procedures here with other parts of the word, and the difference was striking. It showed that most procedures were about a third of the cost compared to the U.S. The article went on to talk about the huge strides in quality overseas. In fact, a lot of these procedures are being done by U.S.-trained physicians with U.S.-manufactured medical equipment. That was kind of an eye-opener that maybe there's an opportunity. Then I found the Web site, where consumers can get probably more quality information about offshore hospitals than they could about facilities in the U.S. Next, we started talking to providers here, and told them what we've researched and that they needed to start addressing the cost-value equation. Pretty much what we got back from the providers and health systems in our marketplace was that they really didn't feel the need to be concerned about a regional marketplace or global marketplace and that patients wouldn't move from the hospital service area; they didn't think employers would create incentives for employees to do so. We started talking with our partner Aetna and proposed further research on the idea. Last November, I spent a week in Singapore to look at some of the hospital systems there, and I was absolutely impressed by the level of amenities; it felt like you were going into a five-star hotel. They really consider the patient experience. I was also impressed with the quality of care, and frankly the Singapore government is much more open about publishing complication rates and outcome rates. Those types of things have been very hard to get from a transparency point-of-view from U.S. hospitals.

RJ: What was the response when you brought up the concept of a medical travel benefit to your employees?

PH: We did focus groups with our employees and were really quite surprised. The way we positioned it was to show some examples, take a hip replacement. We told the focus group they could get a hip replacement in the U.S. for around $45,000 to $50,000 and compared it with Singapore, where that hip cost about $10,000 to $12,000. We have maximum out-of-pocket protection, so our folks once they reach $2,000 to $3,000 out of their pocket we pay 100% after that. So the maximum exposure our folks have is that $2,000 to $3,000, but when our average salary is about $30,000 you're talking about 10% of their annual pay. We asked them in the focus group if they had our current benefits available to them, but with the medical travel benefit we would pay 100%—we'll waive coinsurance and pay for travel pursuant to IRS guidelines—how many would be interested in going? They had some questions about quality, but the majority of our folks said they'd be willing to travel. They were intrigued by the opportunity to experience another culture.

RJ: Once you had your medical travel benefit in place, did you expect to get a reaction so quickly from U.S. providers?

PH: The response we've received from the U.S. health system has far exceeded my expectations. Our wildest expectation and hope would be to create a different dialog with U.S. providers. First, we did this to give our members options and choices, but we hoped to change the response from our U.S. healthcare system to really look beyond their hospital service area and see that the world is not flat. It's changing. As of yet, we have not sent a single patient to Singapore, but as soon as the news media reported that we were offering the medical travel benefit we started getting calls from U.S. hospitals. They said, "We can offer you similar value that offshore is offering." To me that was a remarkable transformation. Working with Aetna, we have at least one confirmed hospital in our geographic region willing to participate in this program next year, and there's a chance for others. So now our associates will have choices. They haven't lost any benefits, so they can go where they've always received care, or they can choose the enhanced benefit, with Singapore as a choice as well as at least one other hospital in our region.

Note well, reader, that Hayes says he is fielding competitive offers from U.S. healthcare providers. Although I don't know the details of these offers, I suspect they aren't trying to match the steep discounts of global hospitals. However, the fact that some U.S. providers are already feeling the pressure to respond to the threat of global healthcare is a good sign for U.S. employers and consumers.

Rick Johnson is senior online editor of HealthLeaders Media. He may be reached at
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