Markets In Everything: Domestic Medical Tourism
BUSINESS INSURANCE -- When Scarborough, Maine-based supermarket chain Hannaford Bros. announced last year that it would begin sending its employees to Singapore for knee and hip replacements to save the company money, it attracted the attention of several hospitals in Boston that offered to match the price. What the company probably did not realize at the time was that it was at the forefront of an emerging market: domestic medical tourism.
Unlike foreign medical tourism, patients don't leave the country. Instead, they travel to another city within the United States to have procedures for up to 75% less than they would pay if they were treated closer to home. One of the primary reasons some U.S. medical facilities are willing to be paid less is that they are generally compensated upfront, before the procedures are conducted, which enables them to avoid the arduous task of seeking reimbursement afterward from insurers and third-party administrators. The facilities also receive a single package price that is negotiated beforehand.
MP: Market competition is a wonderful antidote to rising medical care costs. Even if there's no interstate competition for health insurance (see related CD post), there appears to be a growing market for interstate hospital care.