The U.S. medical tourism industry, though burgeoning, is still in its early stages. Its development will be dictated by a variety of market factors and the reactions of a variety of market sectors including patients, insurers and employers. In addition, whether the industry can effectively demonstrate the quality of medical care abroad and provide a reasonable degree of comfort for patients and employers with respect to possible bad outcomes will affect its development. -Dale Van Demark, Member, Epstein, Becker Green P.C., Washington, DC.

The Deloitte Center for Health Solution's report on Medical Tourism estimates that in 2007, 750,000 Americans traveled abroad for medical care, and that number is expected to increase to six million by 2010. This means that the base-case for the annual growth rate in outbound medical tourism is estimated at 100% from 2007 to 2010. The report identifies three medical tourism categories - outbound, inbound and intrabound (domestic).

Medical travel to countries outside the United States and to it has existed for many years. In developing countries, the influx of incoming medical tourists was initially limited because of constraints like poor communications, transportation, water and sewer systems and electricity and power generation. As economic development took root, the resources and opportunities became available to build health care centers for people to travel to from all parts of the world. Today, there are high-quality, customer-service oriented hospitals and facilities in developing nations like India and Thailand that provide medical care at costs sometimes as much as 80% lower than in the U.S. Often times, this savings includes airfare and a stay in a resort hotel. Thus, many under-insured or uninsured residents of the U.S. choose medical treatment abroad because of the high cost of health care at home.

The American Medical Association (AMA) has acknowledged the growth in medical tourism by adopting new guiding principles - a first of its kind - outlining steps for care abroad for consideration by patients, employers, insurers and third parties responsible for coordinating travel outside the U.S. The AMA guidelines come at time when U.S. health insurance companies and employers are considering making "medical tourism" a part of health benefit packages offered. As an example, CIGNA, Aetna and Blue Cross/Blue Shield have begun or are considering pilot programs that provide limited coverage for foreign care.

Michael Horowitz, M.D., MBA, Founder and President of Medical Insights International believes that the trend toward people in the U.S. sidestepping services available in their communities to travel to less-developed countries for medical care is critically linked to the nature of delivery of healthcare services here and in the U.S. and in developing countries. "It is a consequence of lack of affordability and availability in many foreign countries," says Horowitz. "Increasingly, insurance companies are exploring ways to take advantage of lower costs and superior availability of services offered in foreign countries."

What is the link between insurance companies and medical tourism?

What began as a phenomenon that was mostly identified with the self-pay, under- and uninsured market, medical tourism has expanded into the insurance and employee benefit market with insurance companies, benefit consultants, third-party administrators and self-insured employers developing medical tourism products. "The development within the third-party payer market has many anticipating a huge increase in the number of medical tourists as plans roll out, promising huge savings to employers and those patients who choose the medical tourism option," says Van Demark.

A major New England grocery chain has an agreement with Aetna that offers employees in need of hip and knee surgeries medical travel to Singapore. "While overseas hospitals are actively marketing their services in the U.S., we are carefully considering the associated quality, cost and follow-up care issues. We have a plan in place with Hannaford Brothers, in Maine to evaluate the benefits and costs of this type of program," says Christine R. Erb, Communications Business Partner at Aetna.

"Our efforts are to work with health care providers and plan administrators (like Aetna) so quality of care is always advancing and cost is as reasonable as it can be for our associates and Hannaford as an employer." Michael Norton, Director of Corporate Communications, Hannaford, Scarborough, Maine

Hannaford Brothers has partnered with the National University Hospital in Singapore for services and will pay airfare and lodging for the patient and a companion. "Under IRS guidelines, up to $10,000 of travel-related medical expenses are tax-free to the patient. Hannaford expects savings of around $3,000 to the company and to the employee," says Peter Hayes, Director of Associate Health & Wellness.

Are too few employees taking advantage of medical travel abroad?
Although there are some companies that offer medical tourism alternatives, many feel that the offers are not taken for a variety of reasons. Dr. Horowitz believes that one important barrier is the fact that many potential medical tourism candidates find it a daunting task to identify a qualified physician and facility in the global marketplace.

René[<00E9>][<00E9>][<00E9>][<00E9>]e-Marie Stephano, Esquire, COO of the Medical Tourism Association and editor of Medical Tourism Magazine believes that employees need to be better educated about medical tourism. "Once the employee understands that there is high quality care abroad and is willing to go, the type of surgery necessary has to qualify for medical tourism to come about," says Stephano. Some employees are wanting and willing to go but their condition will not allow them to travel. For example, a patient may need a certain heart procedure and is qualified for medical tourism benefits - but his or her doctor restricts travel because of the condition. Stephano feels that medical tourism is still a relatively new offering by most employers and insurance companies, and "it may take a while to start seeing the results and return on investment."

Intrabound Medical Tourism - Centers of Excellence

As an additional benefit, international healthcare options are opening doors that benefit healthcare domestically. Although not as prevalent, intrabound medical tourism patients travel to non-local facilities or "Centers of Excellence" (tiered performance networks, which help associates choose the best care providers and settings to receive treatment while saving on health care costs) within their country. Reasons can include the need for a special, complex procedure that is only done at certain facilities, decreased waiting times, higher quality of care, lower costs and inclusion of the facility under coverage provisions of an insurance program.

Hayes explains that after offering employees the option of traveling to Singapore for hip and/or knee and spine surgery and receiving nationwide media exposure, he received calls from several American hospitals offering to match the savings in Singapore. "This has allowed us to negotiate deals for hip and knee replacements with hospitals in the U.S.," he says.

In fact, large employers with bargaining power are working to or have struck deals with foreign hospitals, and use this as leverage to bargain down the prices at domestic hospitals. Employers are creating networks that give employees the opportunity to access hospitals all over the U.S. that provide a much wider range of cost and quality of care options.

Erb says that while employers back medical tourism largely as a cost issue, Aetna sees it a little differently. "We are seeing it as a quality and cost opportunity. We are also seeing American hospitals displaying increased transparency on cost and quality data, similar to what is seen from some of the better overseas institutions," says Erb. Some domestic hospitals are responding to consumer and employer interest in medical tourism, and are willing to talk about the creation of a similar program that supports employer-funded travel to specific American hospitals that have agreed to competitive rates for similar elective surgical procedures. After examining "all in" costs, including the procedure, travel, etc., some domestic hospitals are finding that they can deliver a compelling and competitive price to compete for business that might otherwise go overseas.

U.S. Hospitals Working With International Health Systems
"As an American hospital's reputation and presence in a region grows, so does the number of referrals to it."
Michael D. Horowitz
With an increasing number of patients from around the world traveling for healthcare, the question of quality has been raised. When considering foreign providers, many look for the Joint Commission International's stamp of approval - an indication that a hospital has the systems and processes in place to support high-quality and safe patient care. `
After 9/11, the ability for American hospitals to successfully attract patients from around the globe was hindered because it became difficult (particularly for those coming from the Middle East) to obtain U.S. medical visas. More than seven years later, hospitals are once again enjoying an increase in international interest, leading many hospitals in the U.S. to partner with health care systems abroad.

There are several major U.S. healthcare providers that now have extensive presence in the Middle East, the South East and Asia. "U.S. hospitals systems have long received patients from the international marketplace," says Horowitz. One of the biggest reasons for this venture is that hospitals have a great deal to gain in the way of revenue, and joint ventures result in generous tax incentives for U.S. hospitals. Foreign hospitals have recognized that partnering with a well-known hospital system and/or medical school gives them instant credibility and becomes a draw spurring economic growth and development within that region.

The Deloitte report finds that inbound tourists are not as concerned about saving money as they are about the higher quality and decreased waiting time with U.S.-based medical care. Therefore, those providing inbound medical tourism programs are primarily large teaching institutions that have national and/or international reputations.

"U.S. healthcare providers are very active in the international market, and many are trying to attract medical tourists to their U.S. facilities." Dale Van Demark

There have been several initiatives that have helped promote clinical programs related to U.S. inbound medical tourism. The establishment of international partnerships and the formation of international health care projects have led to increased awareness of the opportunities for foreign patients to travel to the U.S. for care. Many U.S. medical centers have listed their services in international medical directories, and foreign physicians and U.S. physicians training abroad have helped to increase the number of referrals to the U.S.

Other factors to consider

According to Van Demark, medical tourism does come with a risk to patients and payers. He says that, generally any individuals who receive medical treatment overseas have to depend on the legal process that is available in that country should there be any problems, which may present challenges. "This could lead to increased risk for insurers and employers that offer medical tourism products as patients may look to local 'deep pockets' for a remedy," says Van Demark.

Van Demark said that government reaction to medical tourism has been mixed. The U.S. Special Committee on Aging has authorized the reaction of a task force to examine the situation. California has adopted a law to specifically allow for insurers to pay providers in Mexico, and other states have considered similar legislation - some that would even encourage state workers to seek treatment abroad.

Future of medical tourism

Overall, the impact of medical tourism - based on Deloitte reporting a 100% increase by 2010 - will have an enormous negative financial impact - costing U.S. health care providers as much as six billion dollars on the higher end of the scale.

The combination of the number of outbound medical tourists, further hikes in healthcare costs and the price advantage of leaving the U.S. for medical care - plays a significant role on just how great the costs will be.