Medical Tourism Continues to Grow in Popularity Despite Concerns

Several years ago, employers would never have dreamed of sending covered employees overseas for medical procedures just to save money. But seeking medical treatment abroad has become a more attractive option for many employers these days, especially when faced with the increasing cost of healthcare (see our Eyes on Benefits from December 8, 2006). In fact, the rapidly growing practice of “medical tourism” has become a $2.1 billion business that is forcing employers and medical carriers alike to take a closer look at the concept despite concerns over safety and liability.

Including medical tourism as part of the health insurance offering can save consumers seeking non-emergency procedures (dental, cosmetic, orthopedic, cardiovascular, etc.) as much as 90 percent in claims compared to U.S. costs. According to Companion Global Healthcare, a heart bypass surgery in the US is approximately $130,000 compared to $7,500 to $9,000 in India. Even after factoring in the cost of air travel, lodging and food, foreign medical treatment can come cheaper than American medical care. But the question most employers are asking is: Does the cost savings outweigh the risks?

There are a number of reasons why healthcare procedures are much cheaper overseas – lower labor costs, fewer medical malpractice laws, fewer liberal lawsuits, no windfall of economic recoveries, less costly insurance, lower costs for medical parts and supplies, plus the fact that most private overseas hospitals are not obligated to service the uninsured. But employers must be wary of concerns related to quality of facilities, continuity of care and legal liability if they are interested in making medical tourism a part of their benefit program.

In terms of quality, many employers are careful to select facilities that are accredited by the Joint Commission International (JCI). An affiliate of the organization that inspects U.S. hospitals that receive Medicare dollars, the JCI evaluates everything from whether hospital workers wash their hands to how hospitals procure, secure and administer medication. The JCI is so well-respected that some medical travel vendors work only with hospitals that the organization has accredited – about 200 worldwide, including 10 in India.

But even if the procedure is done at a certified facility, employers must still take into account the fact that continuity of care is likely to be disrupted. Patients may return to their family physicians with no documentation concerning the care they received in a foreign country, which affects proper follow-up care. The task of the family physician is made far more difficult in these cases, and they might even find themselves providing postoperative care to patients who overestimated benefits and underestimated risks associated with treatment.

Also, there is presently no international law governing liability in medical tourism cases. Employers that incorporate medical tourism provisions in their benefit plans and their affected employees must understand the element of risk when crossing international boundaries. If there is a complication, medical tourists face substantial hurdles in obtaining legal recourse based on jurisdiction and the ability of a foreign provider to pay financial damages, because of the likelihood that the provider does not carry medical malpractice insurance. Any complaints must be resolved in the country where the patient is treated. If a complication arises from a procedure done abroad, the health insurance provided by employers is still liable for treating the complications upon return – and it only takes one person to have a complication for the employer plan savings to be wiped out.

Such concerns, however, are unlikely to slow the trend of medical tourism adoption in group health plans. According to a recent study by the Deloitte Center for Health Solutions, more than 750,000 Americans left the country seeking better value medical treatments, from knee and hip replacements to bypass surgeries in 2007, and this figure is projected to increase to 6 million by 2010. In addition, insurers such as Blue Cross Blue Shield of SC, Aetna and others are beginning to establish partnerships with overseas health providers and implement plans that include medical tourism for specific procedures. (NC employers should note that fully-insured medical carriers serving companies headquartered in NC have not yet adopted medical tourism as a part of their offerings. Therefore, any efforts to include this in your medical plan would require a self-funded arrangement using an administrator that specializes in this type of service.)

In the end, medical tourism as a benefit may be financially advantageous in many circumstances, but it is ultimately the decision of the individual employers that will make or break this practice.

For more information on this topic, please visit the following links:

Medical Tourism: Consumers in Search of Value (Deloitte)

Medical Tourism Represents a $2.1 Billion Business

Medical Malpractice Overseas: The Legal Uncertainty Surrounding Medical Tourism

* * * * *

Don't forget to participate in the 2008-2009 NC Healthcare Benefits & Cost Survey!  All survey participants will receive FREE, electronic summarized results that will provide you with current market trend information to benchmark your medical plan designs and contribution strategies against other businesses in North Carolina and within their specific industry.

Don’t allow your organization to be left in the dark! Participate today!

Please Note: If you no longer wish to receive communications of this nature from Hill, Chesson & Woody, please reply to the sender of the email with the word "unsubscribe" in the header.  Thank you.

Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.

November 21, 2008

Hill, Chesson & Woody strives to keep our clients' group decision makers abreast of trends influencing the employee benefits market. Look for Eyes on Benefits to bring you news and information affecting you and your employees.

194 Finley Golf Course Road, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.913.0237

www.hcwbenefits.com