Thursday, February 05, 2009

Medical Tourism: Comparable to How Toyota, and Overseas Competition Changed U.S. Auto Industry

More people are engaging in medical tourism because of rising health care prices in the United States, said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. “As more and more people have out-of-pocket responsibility, they’re looking around for the best deal, and out-of-country services are an incredibly good deal if you’re willing to travel,” Scandlen said.

The rise in medical tourism is cause for alarm among some domestic health care providers, and it will end up forcing them to improve their services. “I’d compare this to the introduction of Volkswagens and Toyotas, what that did to American automotive manufacturers,” Scandlen said. “It’s showing another way of doing business that the automakers in the United States were just too indifferent to adopt, so competition had to come from somewhere. It came from overseas.”

“The American hospital model simply isn’t working well anymore, so patients will find someplace else,” Scandlen continued. “Competition will assert itself, like it or not. If American hospitals don’t relearn how to run their businesses based on some of the ideas that are coming from overseas, they will go the way of the automakers.”

American health care providers are especially concerned because much of their most-lucrative business is going overseas. The amount of profitability being exported far exceeds the number of people going abroad.

John R. Graham, director of health care policy at the Pacific Research Institute, agreed. “Medical tourism is a great opportunity to reduce U.S. health spending and allow more Americans to get high-quality care abroad,” he noted.


U.S. hospitals have very high cost structures,” said Graham, “largely caused by government regulation that inhibits competition and specialization, requiring general hospitals to be all things to all people. In the long run, as their ‘profitable’ operations disappear overseas, American hospitals will face a crisis that will require policymakers to rethink how they organize the health care safety net.”

“Quality and patient protections vary widely in other countries, just like they do within the United States,” said Michael Cannon, a senior fellow at the Cato Institute. ”What we don’t get in the United States is price competition, but that can’t last forever, particularly with foreign providers offering comparable quality at a lower cost.

“Medical tourism can only grow,” Cannon added. ”And that’s a good thing.”

~From The Heartland Institute's report "International Medical Tourism Is on the Rise"

HT: NCPA

MP: "Competition breeds competence."

9 Comments:

At 2/05/2009 10:08 AM, Anonymous feeblemind said...

A few years ago, a neighbor with no health insurance went to India to have a procedure done. Total cost of traveling to India, staying three weeks and returning was $7k compared to $24k to have the procedure done here. I have wondered why health insurance companies don't pick up on this. Leave the decision to the consumer, but if they elect to go overseas for a procedure as in the mentioned example, why not give the consumer an $8500 check and the insurance company pockets the other $8500 in savings?

 
At 2/05/2009 10:32 AM, Blogger Paul said...

This is exactly right. Johns Hopkins, in fact, has a sister hospital in Panama city that offers quality health care at a fraction of the price in the US.

Also, my wife went to Colombia, her native country, to have some cosmetic and dental work done because it was so much cheaper than here. The doctors, who were trained in the US, did an outstanding job.

 
At 2/05/2009 3:00 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...

Just you wait. Our government will solve the problem, as only government can.

First we'll get single payer/national health care, with mandatory membership and massive tax increases. Follow that up with a ban on private health insurance for those who want quality, unrationed treatment. Then add a ban on traveling overseas to purchase medical procedures.

I love my country, but don't much care for my government. Indeed -- every day, in every way, I care less and less for it.

 
At 2/05/2009 3:36 PM, Anonymous Cromagnum said...

I agree 100% with the need for competition. Two years ago I entertained the idea of partnering with an enterpreneur in the Medical Tourism field, until I started looking really hard into it. I even went to one of Greg Scandlen's conferences. Luckily i still kept my day job.

However there is a world of difference between a car and a human repair. After 70 years of improvements, all US cars (domestic and import) met uniform safety standards. Equal base quality. Not neccesarily the same when comparing hospitals across National borders.

There still is alot of uncertainty for Medical Tourism, versus the Automarket. And sick people may feel that a hospital is the place you actually go to die, but you really hope to maybe get better. Would you want to die in _________ (name that country?)

I could see better benefit to parking a hospital-ship (staffed like a cruise ship, aka cheap labor) off the US coast. Less travel time, no foreign country or disease to handle.

The single biggest reason it is cheaper to go overseas is the exchange rate.
The Prof did show the Big Mac Index recently:
http://mjperry.blogspot.com/2009/01/big-mac-index.html
India is absent from that chart of that index.
However, using a 2006 source of worldwide purchasing power,
http://www.ubs.com/1/ShowMedia/ubs_ch/wealth_mgmt_ch?contentId=103982&name=eng.pdf
2006: An economic basket of goods that sold for $100 in NYC, sold for about $38 in Mumbai.
Thus a $10,000 surgery would be expected to be about $3,800.

This savings is compounded by reduced costs of hospital operation. Less insurance bureaucracy, and lower wages. Also per above, in 2006: A wage of $100 in NYC is equivalent to $7 in Mumbai. Hence the outsourcing Call Center boom.

If the quality is equal, then it is a bargain. It really depends on the risk that the consumer is willing to take in the market. As long as US Insurance hides/covers the risk, the benefit of the Taj Mahal after heart surgery is minimal.

One sticking point that the Japanese Automakers never faced: India is the only country in the world that still has the Bubonic Plague. Now that is its own risk.

Until the US insurance industry gets involved, Medical Tourism will remain a cottage industry.

 
At 2/06/2009 11:31 AM, Blogger David said...

safety & quality..."Not neccesarily the same when comparing hospitals across National borders"..but also not necessarily the same when comparing hospitals within the U.S. national borders.

 
At 2/06/2009 2:05 PM, Blogger @sethstorm said...

No thanks, third world doctors can mess someone else up. Much like my Altama boots, my health care is US-only.

Nothing gets said about malpractice, especially when they're in unstable jursdictions with questionable legal systems and health problems of their own.

Never mind what questionable shortcuts get taken and aren't malpractice.

The fastest way to end this quickly is to automatically revoke coverage for medical tourism.

 
At 2/06/2009 6:40 PM, Blogger Phil said...

Good blog. For those of you who have not personally seen some of these facilities, you would be amazed at how stunningly beautiful they look. Moreover, some of them are actually run by Americans living abroad and have American trained and board certified physicians doing these low cost but excellent surgeries.

Competition helps improve service and quality. US facilities need both.

 
At 2/27/2009 7:54 AM, Anonymous Best term life quote said...

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At 10/08/2009 9:46 AM, Anonymous Don Wood said...

@sethstorm would be really surprised to learn that the death & complications rates are far less in India than in America. And the Staff Infections in America are unknown to India's private hospitals. India's medicine is usually about five years ahead of America's.

I ought to know because I'm one of three owners/directors of America's Medical Solutions, Pvt. Ltd., in Mumbai (Bombay), India. We give our concierge services away free in hopes of a 15% gratuity, but we're Americans who have "been there and done that" but living right here in Mumbai.

We know what you need and want and we provide those contacts for any kind of medical, dental or clinical needs. Don't wince when you look at the back side of your latest prescription medicine if you find it was manufactured in India.

As one of the writers said, it's competition, and competition is always best for the customer. India just has to do a better job, and she is doing that in all references to medicine, hospital, clinic, nursing, cleaning staff, surgery, room for patient with a companion, etc. Picture a Five Star Hotel room in the middle of a hospital and you would get the right picture. Nothing is like it in America.

Don Wood, Co-Director, AMS

 

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