Tom Barlow ,
Daily Finance |
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.