Medical Tourism: A TPA’s Guide to New Territory

You know you must continually bring new products to the market if you want to retain and grow your client base. You wisely watch industry trends and tune in to what clients and employers want. So you may already know medical tourism is one of the most talked about new offerings in health insurance.

Medical tourism is the practice of traveling abroad for high quality medical care at a fraction of the cost of care in the United States. The concept has caught fire among consumers and is rapidly becoming an attractive option for U.S. employers, health plans, TPAs, stop loss carriers, medical group underwriters and other health benefits administrators.

The Numbers Add Up
As healthcare costs, plan deductibles and co-pays continue their upward spiral, patients and employers actively seek lower-cost options. Recent checks on the status of medical tourism indicate explosive growth in the next three to five years.

• In 2007, an estimated 750,000 Americans traveled abroad for medical care. This number is expected to increase to 6,000,000 by 20101.

• In Deloitte’s 2008 Survey of Health Care Consumers, nearly 40 percent said they would travel outside the country for medical treatment if the quality was comparable and the cost was cut in half.

• In a 2008 survey of 400 U.S. corporate benefit managers conducted by the International Foundation of Employee Benefit Plans, 11 percent of employers now cover medical treatment outside the U.S.

“Medical tourism is here and it’s here to stay,” says Charles “Chuck” E. Bertolina, RHU, chief executive officer of Excess Loss Insurance Services (EXL) and a leading authority in the stop loss arena. “It’s not a matter of if, but when employees and companies accept medical tourism as a practical alternative. It saves money and the results are great; everybody wins.”

Benefits of Going Abroad
There’s no question cost is the driving force behind the medical tourism movement. Medical care in countries such as India, Thailand and Singapore can cost as little as 10 percent of comparable care in the United States including airfare and resort hotel accommodations for the patient and a companion. In some cases, the cost savings are significant enough for employers to pass the difference onto employees to reduce copays, as an incentive to use the services or to offset other employee expenses.

Cost isn’t the only attraction; quality of medical care, access to services, excellent personal care and comfortable surroundings are also enticing more consumers to consider this alternative.

The biggest misconception about medical tourism has been the quality of care, but thanks to positive media coverage, increased consumer education and patients relating their actual experiences, these fears and myths are going by the wayside. In New Zealand, for example, patients have access to aortic valve replacements, robotic surgery and other leading-edge procedures not yet available in the U.S. A key quality benchmark is accreditation by the Joint Commission International (JCI), which maintains rigorous standards for credentialing and accrediting facilities abroad. Responding to the rising interest in medical tourism, the JCI had accredited 147 international centers as of May 20082. In some destinations, treatment is provided by some of the best doctors in their fields, many of whom trained at prestigious institutions. Equipment and facilities are comparable or better than those in the U.S., and patients often find they can afford a more luxurious hospital stay.

Timely access to services is another major benefit of traveling abroad for medical care. Wait times for surgery, which can be months in the U.S., are reduced to a few days or weeks in a less overburdened foreign hospital. Facilities specializing in medical tourism may also provide better and more personal care than U.S. patients receive at home. Many international hospitals actively court business in the U.S. by catering to American tastes and expectations of excellent quality and service.

As attractive as medical tourism is, however, it isn’t right for every medical condition. It is most relevant for elective procedures such as hip and knee replacements, non-emergency cardiac surgery, cosmetic surgery, dental surgery and others with minimal chance of complications. Typically, when an employee applies for surgery precertification, a TPA implementation director or human resources director determines the feasibility of medical tourism, and the medical tourism service provider conducts another screen to ensure the solution is appropriate for the patient.

Dr. Edward Watson, executive chairman of Medtral New Zealand, a company providing access to medical care in New Zealand’s leading private hospitals, explains the process further: “We go through quite a rigorous review before accepting someone for treatment. Radiological and lab tests are sent to the doctors so they can determine whether the patient is suitable for surgery, patients talk directly with surgeons and they meet in person several days before surgery. Although we do have international patient coordinators to help manage travel and logistics, our focus is on medicine rather than tourism – so much so that we’re the only provider in the world offering insurance coverage in the unlikely event something goes wrong.”

How to Find the Right Medical Tourism Partner
Cost savings, quality care and wider availability of services are causing employers to take notice of medical tourism, but to be successful over the long run, TPAs must package it in the right way. That means finding a premier medical tourism service provider.

Medical tourism service providers guide patients and providers through the process, often assisting with logistics and travel arrangements. “TPAs and health plans typically do not have resources or expertise to establish provider contracts outside the United States,” says Richard Lungen, president and founder of the Lungen Group. “As a TPA, you want to select the best practice service partner who can provide medical travel contracts, patient advocacy and coordination. By selecting a best-in-class medical travel service partner, your TPA and its groups will be ensured optimal satisfaction.”

Medical travel is a landmark offering, so it’s important to find a service provider with the best global provider network, turnkey customer care, concierge services and full data reporting (outcomes, savings and claims). According to Victor Lazzaro, Jr., chief executive officer of BridgeHealth International, your provider should demonstrate genuine healthcare experience, leadership, an emerging suite of vendors and an in-depth understanding of the healthcare continuum. “Avoid service providers who are little more than glorified travel agents,” advises Lazzaro, whose company has taken a lead position in the medical tourism industry. “Medical tourism is unfamiliar territory, so we advise TPAs to look for key service features that will ultimately decide the success or failure of the benefit.” Among his suggested qualifications are:

• A network that provides geographic choice, giving employers and employees more treatment and destination options.

• A high regard for personal and medical safety in all provider locations: hospitals, outpatient facilities and the destination country.

• Willingness to create customized solutions and streamline administrative functions such as provider sourcing, scheduling, evaluation and contracting, coordinating with employees and payment.

• An easy billing process that removes undue administrative burden from employers.

• Financial stability to deliver on promises to businesses and individuals.

• Staff to fulfill activities and meet reporting requirements.

What’s Ahead
Medical tourism’s advantages will no doubt keep it on a growth trajectory, and not just with people traveling from the United States. Citizens in Canada, the U.K. and elsewhere are also getting on board, as medical costs and wait times in Western countries continue to increase. In fact, Dr. Watson sees patients coming to New Zealand from all around the globe.

As the market for medical tourism heats up, another interesting phenomenon is at work. The prospect of losing revenue to overseas markets is prompting some U.S. hospitals to match lower foreign prices. This means employers can both exploit the variations in quality and cost abroad, and also leverage the deals they've negotiated with foreign hospitals to secure better rates in the U.S. This so-called domestic medical tourism could be appealing to those hesitant to travel to a foreign country. Chuck Bertolina validates the trend: “Medical tourism is already impacting the domestic side of healthcare delivery. It’s an evolving strategy that gives TPAs yet another unique service to offer their clients.”

Clearly, the world is at a tipping point for the widespread adoption of medical tourism, both foreign and domestic. With the right guidance, TPAs can seize these opportunities with confidence and become part of the positive change.

1. “Medical Tourism: Consumers in Search of Value,” produced by the Deloitte Center for Health Solutions, 2008.
2. “Medical Tourism Report to the American College of Surgeons Patient Safety and Quality Improvement Committee,” Nora Institute for Surgical Patient Safety, June 17, 2008.