Flat-World Healthcare

Rick Johnson, for HealthLeaders Magazine , January 13, 2009
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Globalization is no longer an uncertain trend in the distant future. With employers beginning to sponsor medical travel benefits and more international competitors focusing on high-dollar elective procedures, U.S. providers must refine their organizational strategy to compete in a marketplace that is broader than ever before.

It's been called many things. A disruptive force. A competitive threat. A lifeline. A pipe dream.

By any name, the globalization of the healthcare industry is a certainty. Joint Commission International had 178 accredited hospitals listed on its Web site last month, and the organization anticipates a 34% jump in the number of JCI-accredited facilities by the end of 2009. Less certain, however, is the real impact that these international facilities will have on the U.S. healthcare system. Some predict that soon millions of Americans will head to other countries for cheap access to elective surgeries. Others say the so-called medical travel trend has little appeal and, therefore, limited influence.

The number of skeptics, however, is shrinking. "Globalization is happening," says Daniel Snyder, group chief operating officer for ParkwayHealth, a Singapore-based healthcare group that operates 15 hospitals with more than 3,600 beds in Asia and patient assistance centers throughout the world. "All you have to do is get on a plane and go to Asia to figure out that the balance of power, the balance of economics is changing. And the United States cannot just do nothing anymore, because doing nothing means the United States will be uncompetitive in the global marketplace."

If 2008 was the year of over-hyped global healthcare options—with medical tourism stories landing on the covers of popular magazines like U.S. News & World Report, Fast Company, and the Economist—2009 might just be the year that begins to prove the concept on a large scale.

At least some of the economic fundamentals are starting to line up in support of an increase in employer-sponsored medical travel benefits. In a down economy, U.S. employers are saying they cannot keep up with the cost of healthcare, and paying an average of $8,482 per worker for health coverage puts them at a competitive disadvantage globally. For the first time ever, American workers in 2008 on average paid more than $1,000 for employer-sponsored insurance coverage, according to benefits consulting firm Mercer, which is up 17% from $859 in 2007.

What's more, the high-deductible, consumer-directed insurance trend is only expected to escalate in the coming years. Employers want workers to pick up more of the healthcare tab so that they will make smarter and more cost-effective health choices, and as they shift more of the financial burden onto workers, some employers are also trying to give them cost-saving options to make their healthcare dollars go further. With large companies and payers watching intently, a handful of employers have entered into deals with international hospitals to offer medical travel benefits as part of their self-insured plans.

For instance, when executives at Hannaford Bros. Co., a Scarborough, ME-based supermarket, met with local health system leaders to discuss healthcare costs, they brought with them medical travel and other healthcare research as a cost-reduction strategy and asked the local healthcare executives how they would address 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," says Peter Hayes, Hannaford's director of associate health and wellness. "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."

A year ago, Hannaford added a benefit that provides cost-saving incentives to its 9,000 covered employees who travel to Singapore for select elective procedures. This month, another medium-sized employer is following Hannaford's lead: Serigraph Inc., a Wisconsin-based specialty printer, has begun offering trips to Apollo Hospitals in India for employees who need joint replacement, upper and lower back fusion, and other elective surgeries.

Vishal Bali, CEO of Wockhardt Hospitals Group, one of India's fastest growing private hospital chains, says his system has begun receiving patients through an agreement with a U.S. employer. Because of a nondisclosure agreement, Bali says he is not allowed to name the company, but he says Wockhardt has performed elective surgeries—including joint replacement, spine surgery, and cardiac surgery—for 10 of the company's workers in the past six months.

Bali had spent years hoping for large health plans to embrace medical travel. He thought this might spur the anticipated influx of American medical travelers, but more recently he has concluded that U.S. employers will have to lead the way and push payers to make the change.

"Employers are asking for innovative solutions around reducing their overall healthcare spend," says Bali. "Hospitals in the United States are not going to be able to change their cost structures. Then what are the other options? Looking at our global options for reducing healthcare costs."

This belief that legions of employers will move workers from group to individual insurance products fueled projections from the Deloitte Center for Health Solutions that by 2010 as many as 6 million Americans may travel abroad for care. (For context, Deloitte estimates that 750,000 Americans sought care abroad in 2007.) But there is going to be a learning curve in which workers become healthcare consumers, says Paul Keckley, PhD, executive director for Deloitte. "We still don't have a true healthcare consumer," he says, "and it puts the employer in a really difficult situation to try to reshape how the employee is going to behave without being intrusive. It's a very, very difficult position that the senior health benefits person is in."

Some international hospital executives say that with employers forcing payers into medical travel, concerns about continuity of care across borders will largely disappear. Employers and payers will, in a sense, develop international networks in which consumers can get access to low-cost elective surgeries abroad and their pre- and post-operative care from U.S. providers.

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