Health of Overseas Medical Tourism in Question Among Employers
The promise of big health care savings for employers has yet to materialize. ‘Employers are not risk takers, and there’s the concern that if something bad happened to an employee in a distant country, they would be liable,’ says one benefits expert.
When Elizabeth Kunz needed several crowns and a root canal a few years ago, she traveled to San Jose, Costa Rica, and paid $2,700 out of pocket to see a cosmetic dentist.
“My dental costs for this work would have been about $10,000 in the U.S.,” says Kunz, a nurse and clinic manager for St. Elizabeth Physicians in Gonzales, Louisiana. “I used the money I saved to take a vacation there while waiting for the crowns to be made.”
Kunz’s then-employer paid its portion—$1,500—of her dental benefits directly to her; and she worked with an outside broker, Companion Global Healthcare Inc., to make arrangements for the trip and the dental care, which she paid for out of pocket.
Based in Columbia, South Carolina, Companion Global Healthcare is one of a small group of brokers that work with individuals and employers to facilitate trips outside of the United States for medical services, from dental work to hip replacements and cancer treatment.
“We can significantly lower health care costs for self-insured employers and their employees, as well as private individuals,” says David Boucher, president and CEO.
Like other medical tourism brokers, Companion Global works with a network of hospitals, clinics and other providers in dozens of countries including Costa Rica, Mexico, Thailand and Turkey, which treat patients at rates up to 80 percent lower than those charged by U.S. medical facilities. The company works with more than 300 employers in 20 states and handles all doctor’s appointments and travel arrangements for employees.
Boucher says that employers often provide incentives to employees who use the benefit, from paying for the travel to sharing the savings. Still, less than 3 percent of his clients’ employees are accessing the benefit in a given year, he says.
“Medical costs continue to increase for employers, and these programs can provide significant savings, especially for those who are self-insured,” Boucher says. “We are seeing a 3- or 2-to-1 return on investment for our clients, and their employees have been satisfied with the facilities and quality of care they receive.”
Though formalized medical tourism has existed for a decade or more, the industry has experienced slow growth, primarily because employers and consumers are still reluctant to participate.
“Employers are not risk takers, and there’s the concern that if something bad happened to an employee in a distant country, they would be liable,” says Joe Marlowe, Aon Hewitt senior vice president of health and productivity. “We are past the point where there should be a lot of hype about the potential for medical tourism. This market has not developed, and the reality is that it’s destined to have limited utilization long term.”
Marlowe cites physical and emotional barriers such as long-distance travel, cultural differences between patients and caregivers, and separation from family and friends as some of the key concerns people have with going overseas for care.
“I think it will always appeal to individuals who are uninsured, or who are enrolled in mini-medical plans, and there’s some appeal for cosmetic surgery, which is not covered by group insurance plans,” he says.
Despite the skepticism about medical tourism, the American Medical Association in 2008 established guidelines for medical tourism that identified specific steps that should be taken by employers, insurers and others responsible for coordinating medical care and travel outside of the United States. At the time, the AMA estimated that as many as 150,000 Americans each year were seeking health care overseas.
Up-to-date statistics about medical tourism are almost nonexistent; however, Deloitte’s 2011 Survey of Health Care Consumers showed that 1 percent of those surveyed in the United States traveled outside of the country for medical services in the past year. The same survey indicated that 3 percent of Americans are willing to travel to another country for necessary or elective medical care if they have access to better care at a lower cost.
Although Aon Hewitt’s 2011 Health Care Survey showed that 72 percent of employers surveyed have no interest in medical tourism, 30 of the 1,000 companies surveyed do have a program in place. A July 2010 Medical Tourism Association survey showed that 71 percent of insurance companies and employers thought health care reform would have a positive effect on the industry.
The experiences of employers hold true to some of these statistics. Blue Lake Casino Hotel in Northern California offers a medical tourism benefit to its 220 employees and about 80 dependents, but no one has taken advantage of it to date.
“The average age of our employees is 34, so we haven’t really had the need to send someone overseas,” says Jack Norton, human resources manager. Norton says he became interested in the benefit a few years ago after hearing about it on a radio talk show.
One provider of medical tourism services to private individuals and employers fell into the industry by accident when his wife required medical care in Bangkok, Thailand.
“She was afraid to go to the hospital, and I had to insist on it because her condition was serious,” says Rudy Rupak, CEO of Planet Hospital in Los Angeles. Rupak says his wife was thrilled with the hospital and care she received, and the $411 bill they received for the care and overnight stay amazed them.
“We came home and decided to start escorting people overseas for affordable medical care,” says Rupak, an entrepreneur with a background in insurance, software and medicine. “I thought it would be a hobby and that we could help people who didn’t have insurance or who had mini-medical or other limited health care plans.”
Planet Hospital works with 17 employers representing 20,000 covered individuals, including Big Bear Mountain Resorts in Southern California and American Apparel Inc. in Los Angeles. In 2010 Planet Hospital helped 29 employees obtain medical care overseas—a utilization rate of about 1.5 percent. At present, the bulk of Planet Hospital’s business comes from private individuals—more than 3,000 in three years.
“The feedback we receive from patients is excellent, and we want to help employers whose employees need to have expensive procedures done and cannot afford domestic prices,” Rupak says.
Savings can be found in medical travel, but it is still frowned upon to outsource medical care, says David Vequist, founder and director of San Antonio-based Center for Medical Tourism Research.
“Most Americans are not interested,” he says. “We see substantial evidence that American employers and individuals might save 30 percent on their almost $3 trillion medical tab annually by going overseas.”
The Deloitte survey showed that 9 percent of Americans traveled outside of their local area for medical services in the past year and 54 percent are willing to travel farther from home for better care or faster access to services. Aon Hewitt’s Marlowe says the real growth in medical tourism may lie within U.S. borders.
“Employers and insurers are looking for low-cost, high-quality domestic medical providers to deliver complex and costly procedures,” Marlowe says. “However, even though significant savings can be realized by going to another city or even state, people are still reluctant to travel two or more hours for treatment, so participation in these programs remains less than what it could be.”
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