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Few U.S. employers book passage on the ship of medical tourism

Estimates vary widely on savings achieved by surgery performed abroad


Despite the cost savings floated by the medical tourism industry, few employers have plunged into the unknown waters surrounding the integration of medical tourism into group health plans.

Medical tourism is the term used for patients seeking health care, predominantly nonemergency surgery, outside the United States. Participating hospitals--mainly in Asia, Central America and South America--are accredited by the international arm of the Joint Commission on Accreditation of Healthcare Organizations or have received the quality certification of the International Standards Organization. Many doctors providing the services have been trained in the United States.

Although medical tourism has yet to make major inroads with employers, some companies are exploring the cost-saving potential and practicality of the approach, experts say. Experts also say benefit managers must consider many factors and analyze the population they are serving before opening the medical tourism door to their employees (see story, page 18).

Some employers, however, are ready to learn as they go.

Hannaford Bros. Co., a Scarborough, Maine-based supermarket chain, made medical tourism available to its employees effective Jan. 1. Initially, company-covered employees and dependents who need hip or knee replacements can elect to have the surgery in Singapore at a cost significantly lower than in the United States (see story, page 18).

"We hope we have a handful of cases and find out their experiences," said Peter Hayes, Hannaford director of associate health and wellness. "It's part of our responsibility to make health care more affordable for our members."

Hartford, Conn.-based Aetna Inc. provides the health plan services for the care in Singapore, an extension of its U.S. program for Hannaford. Employees interested in using the benefit contact Aetna and the insurer puts them in contact with the hospital to make the arrangements.

Hannaford's program includes paying airfare and lodging for the patient and one person accompanying them.

Dr. Charles Cutler, Aetna's chief medical director of national accounts, said the health insurer is doing this "to learn more about the opportunities and pitfalls" in offering medical tourism as an option.

Early stages

"It's in the very early stages and will take years to develop," said Joe Marlowe, senior vp of Aon Consulting's health and benefits practice in Radnor, Pa. "We've had a number of clients ask questions about this who aren't on the verge of putting this in their benefit coverage."

If a Fortune 500 company were to offer this benefit and communicated it well, that would spur other employers to do the same, he said.

There's no way for employers to know in advance of instituting such a program how receptive their employees would be, said Dr. Arnold Milstein, San Francisco-based chief physician at Mercer L.L.C. "You go into it knowing you will learn."

While the concept is relatively new in the United States, the "practice is well-established in other countries," said Victor Lazzaro Jr., chief executive officer of BridgeHealth International, a Greenwood Village, Colo.-based worldwide health care network that provides medical tourism services.

As health care costs continue to rise, employers must consider non-traditional alternatives to "deliver a benefit better, faster and cheaper," said Jay Savan, a St. Louis-based principal with Towers Perrin.

If a surgery costs $25,000 or more in the United States, there would be a significant savings by going abroad for the operation, even after airfare and lodging expenses, said Mercer's Dr. Milstein. Even so, "if every single surgery that is very expensive in the United States was a reasonable fit to do overseas, the impact on health care spending would be no more than 1.5%," he said. Though, for companies with high labor costs, that "is not a small amount of money."

Aon's Mr. Marlowe estimates that the overall savings on an employer's total health care costs by using medical tourism would be less than 3%.

Employers must look very closely at the cost savings, said Aetna's Dr. Cutler. Providers abroad "make comparisons that maximize the differences" in costs, he said. But when the U.S. cost is analyzed and the negotiated health plan discount is factored in, the savings from surgery abroad are less impressive, particularly for U.S. areas where health care costs are lower, he said.

The bottom line is that "we don't have any experience to base cost savings projections on. Actuarial tables show that on procedures that lend themselves to doing this, there are dramatic savings--40% or more (per individual surgery)," said Mr. Lazzaro. An employer's overall savings will depend on how many employees decide to have surgery abroad, he added.

Beyond cost savings, employers have other factors to consider before offering medical tourism.

"The most important factors are the availability of accredited hospitals and the availability of surgeons and anesthetists who have trained and been board-certified in the United States," Dr. Milstein said.

While certain assumptions are made when individuals seek health care within the United States, medical tourists traveling abroad cannot take for granted that the blood supply is safe or that prosthetic joints came from a reliable manufacturer, Dr. Cutler said.

To facilitate comparing surgical outcomes, the West Palm Beach, Fla.-based Medical Tourism Assn. is trying to get top-rated hospitals outside the United States to work with a single method of reporting outcomes data. "This will change global health care and medical tourism," said Jonathan Edelheit, association president.

Medical tourism could start within the United States if quality information improved, said Ted Nussbaum, Stamford, Conn.-based director of health care consumerism in North America for Watson Wyatt Worldwide. "If one would be willing to provide employees data across geography and offer incentives, we can do this in the United States. Once we change behavior, it will be easier to get people to go to different countries."

But that behavior is entrenched, said Larry Boress, executive director of the Midwest Business Group on Health in Chicago. In an informal 2006 survey of its board members, there was "little interest" in sending employees abroad for health care. In addition to quality and liability concerns, the employer board members believed it would be difficult to get employees to get health care services abroad.

"They can't even get people to go to the Mayo Clinic or the Cleveland Clinic," Mr. Boress said. "They want to go to familiar hospitals close to their homes."

Two years from now, the Medical Tourism Assn. hopes to have 400-450 employers on board with medical tourism options, said Mr. Edelheit. That is a huge jump from the current handful of employers currently using it.

"Three to five years from now, I see (medical tourism) as being an accepted, routine part of benefit offerings," said BridgeHealth's Mr. Lazzaro. "We're not going to empty hospitals or put doctors out of jobs here in the United States, but at the same time we want to add some healthy, appropriate competition and help reduce costs."