Medical Tourism

What Is Medical Tourism?

• Medical tourism (also called medical travel, health tourism or global healthcare) is a term initially coined by travel agencies and the mass media to describe the rapidly-growing practice of traveling to another country to obtain health care.

• Such services typically include elective procedures as well as complex specialized surgeries such as joint replacement (knee/hip), cardiac surgery, dental surgery, and cosmetic surgeries. The provider and customer use informal channels of communication-connection-contract, with less regulatory or legal oversight to assure quality and less formal recourse to reimbursement or redress, if needed.

• Leisure aspects typically associated with travel and tourism may be included on such medical travel trips. Prospective medical tourism patients need to keep in mind the extra cost of travel and accommodations when deciding on treatment locations.

• A specialized subset of medical tourism is reproductive tourism, which is the practice of traveling abroad to undergo in-vitro fertilization and other assisted reproductive technology treatments.

Source: Wikipedia – the free encyclopedia

Key Reasons Why People Are Willing to Travel To A Foreign Country For Medical Procedures

• Frustration with high and rising home country health care costs – with savings opportunities of 50% to 90% vs. home country charges.

• In the U.S. – nearly 50 million people have no health insurance and 120 million no dental insurance. Therefore, many must pay out of pocket.

• Those with health insurance still often must self fund elective surgeries; and for “pre-existing conditions” that are not covered under their insurance policies

• There are often long waiting lists for surgery in countries offering socialized healthcare

• Many countries, including developing countries now have access to the latest technologies and standards of care in the top institutions are equal or better than in first world countries.

• Ease and affordability of international travel• Growing number of US trained / accredited doctors working overseas• Increasing nternational accreditation of foreign hospitals

International Price Comparisons – Selected Surgeries (2007)

Why Healthcare Is Less Expensive Overseas

• Lower cost of labor - According to the Centers for Medicare and Medicaid Services (2002), over 71 percent of hospital costs are labor related, which helps explain why countries with low labor costs have a significant cost advantage in medical treatments

• Lower cost of malpractice insurance because of fewer law suits• Lower construction costs (to build hospitals)• Lower costs of living (food, hotels, etc)• Lower taxes• No accounts receivable collections issues with medical tourism

patients (cash/credit card payment before release from hospital). • No emergency room bad debt• Less administrative paper shuffling• Less bureaucracy/red tape• Less expensive medical supplies/equipment/medications

Worldwide Trends

• In 2006, over 500,000 U.S. citizens and thousands of international residents traveled abroad to get healthcare*.

• In 2006, an estimated 40,000 Americans traveled to Mexico alone to receive dental care, and worldwide, over 1 million people traveled abroad for dental procedures.

• This number is growing at a rate of about 15% annually• Medical tourism is already a really serious, over $40

billion business according to the Medical Tourism Association.

• US Insurance Companies are beginning to partner with overseas healthcare providers for selected procedures.

*Source: Assurance Company Limited (AOS) Press Release – August, 2007

Worldwide Trends - continued

• By 2015, the health of the vast “baby boom” generation will have begun its slow, final decline, and….

• With more than 220 million boomers in the United States, Canada, Europe, Australia and New Zealand, this represents a significant market for inexpensive, high-quality medical care.

Medical Tourism distinctions

• Lifestyle centric tourism destinations. – Cosmetology, dental care, day care ophthalmic procedures and

other such day care procedures aptly fit under the category of lifestyle centric. They perhaps warrant the picturesque brochures with the warm sandy beaches and the tropical sea backdrops with Bacardi evenings thrown in. Centers in Turkey have made a success out of cataract procedure programs that are well packaged into a week’s holiday

• Medical care centric tourism destinations. – Advance secondary care or tertiary care treatment centers need

to be focus on clinical excellence with infrastructure and clinical backup to match. Their being on a scenic location would, of course, only be a bonus.

US Healthcare spending facts

• U.S. health expenditures for 2006 exceeded $2.1 trillion, or…more than $7,000 for every American man, woman and child.

• Currently, health-care spending in the US accounts for about 16% of GDP and is projected to exceed 20% in seven short years.

• Over 20% of the U.S. Healthcare dollar is comprised of out of pocket and private spending.

• Employer-sponsored health insurance covered 174 million people or about 60% of the population in 2004.

• Insurance that was purchased directly by the individual accounted for 27 million or about 9% of the population.

• There are several government provided health insurance options available to older citizens. The largest of these is Medicare, with about 40 million enrollees or about 14% of the population.

Source: MICHAEL J. Moody, MBA, ARM in “Medical Tourism”, Issue 3, March, 2008

Attributes Of Medical Procedures That Are Clear Candidates For Consumption Abroad

• The surgery constitutes treatment for a non-acute or non-traumatic condition;

• The patient must be able to travel without significant pain or inconvenience;

• The surgery is fairly simple and commonly performed with insignificant rates of post-operative complications;

• The surgery requires minimal follow-up treatment on site;• The surgery generates minimal laboratory and pathology

reports; and• The surgery results in minimal post-procedure

immobility.

Price Differentials Pertaining To 15 Highly Tradable Procedures

Sources: Health care Cost and Utilization Project (H-CUP) database, 2002, Vanbreda International, and authors’ calculations. An “N/a” denotes that data was not available. Patient volume data pertain to 2002, while the prices pertain to 2004.

The $6,000 Rule

• Medical tourists can now obtain essentially any type of medical or surgical procedure within reason.

• There is a simple test to determine if it makes financial sense to travel abroad.

• If your procedure would cost $6000 in the U.S., you may not realize any financial savings, because, by the time you add the airfare, post-op hotel accommodations, ground transportation, and the other essentials of overseas travel, you may only realize a break-even scenario.

• However, many people still choose to travel abroad to achieve complete privacy and anonymity, peaceful recuperation, and or the avoidance of daily hometown distractions.

Five Predictions About MedicalTourism

1. US health insurers will start to cover medical tourism in 2008 – One already has.

2. Mini-med plans and small employers will be the early adopters

3. Opposition to medical tourism by US physicians will be modest

4. Early adopters include recent immigrants who are comfortable returning to their home country for care.

5. State governments will begin to embrace medical tourism by 2010

• Unlike the federal government, states must balance their budgets, (they cannot issue treasury debt).

Medical Tourism – Implications for participants in the US health care system ©2007, MedPharma Partners LLC, www.mppllc.com

How US Health Plans Treat Health Care Received Abroad