Some employers are looking to take advantage of geographical variations in the quality and cost of health care within the U.S., while others are leveraging deals they've struck with foreign hospitals in order to secure better rates with U.S. hospitals that are eager to keep American patients here. Most of the activity is focused on surgical procedures, such as hip and knee replacement, and cardiac bypasses.
"Employers are looking to get the best value for their health-care dollars," says Randall Abbott, senior consultant at Watson Wyatt. That means finding new ways to both manage their medical costs and provide their employees with high-quality care, he says.
Employers are offering financial incentives, such as no out-of-pocket costs -- which can save workers thousands of dollars -- money for travel expenses, and access to concierge services that schedule appointments and organize travel arrangements, as enticements.
Americans have been traveling abroad to receive medical treatment for a while, but only recently have U.S. employers expressed an interest in it. The prospect of losing revenue overseas is prompting some U.S. hospitals to match lower foreign prices.
In January, U.S. supermarket chain Hannaford Bros Co. began offering employees the option of getting hip and knee replacements at a hospital in Singapore. A hip replacement costs about $43,000 in the U.S. compared with $9,000 in Singapore, according to data from Planet Hospital, a medical tourism company.
"After the announcement, I got calls from several [U.S.] hospitals offering to match Singapore on pricing," says Peter Hayes, Hannaford's director of associate health and wellness.
Hannaford, which is self-insured and therefore pays the medical claims of its 9,000 covered employees out of its own funds, tapped Aetna Inc., which manages its health benefits, to vet the U.S. hospitals.