Taking Off

By Molly Bernhart,  Employee Benefit Adviser Magazine
Morgan Armstrong had heard a lot of casual talk about medical tourism; however, discussion on the subject had been growing louder over the past six months. So, the president of Plan Benefit Services, a Columbia, South Carolina-based employee benefit advisory firm hosted a meeting with his clients where he shared what he knew on the subject and asked the employers what they thought.

Armstrong’s clients were intrigued by the opportunity for significant cost savings. “[But] the same types of questions kept coming up and it was really a perception issue, in terms of quality of care,” he says. “At that point I determined that we needed to make a trip.”

So, Armstrong decided to see the hospitals for himself. He talked to David Boucher, assistant VP for health care services with Companion Global Healthcare, a medical tourism subsidiary of BCBS of South Carolina, who arranged meetings with doctors and hospitals executives.

Armstrong gathered CEOs, CFOs and HR executives to accompany him on his trip. He organized the itinerary with the help of Boucher. Each employer paid their own way. Armstrong brought five clients, with two executives each, and three members of his team.

“I wanted everyone to have a first hand feel for what the employees would anticipate and what they would see when they got over,” says Armstrong.

The group visited two hospitals in two countries — Bumrungrad International Hospital in Bangkok, Thailand and a facility run by Parkway Hospitals in Singapore. At both facilities the group had the opportunity to meet with the CEO of the hospital and department heads from each section of the hospital. At meetings with hospital executives the employers asked questions about how the hospitals saw medical tourism fitting in with their development. The trip to both hospitals also included a complete tour of each facility.

“We were amazed at how upscale these hospitals were, and the quality of care and the way we were treated when we walked in,” says Armstrong. Several of the travelers even had procedures done at the hospitals with positive outcomes and were especially impressed by the number of hospital staff attending to them. “We were anticipating some language issues, but we really didn’t notice any,” says Armstrong.

In Thailand many people do not speak English, but in Bumrungrad everyone did. Regardless, the hospital assigns every patient an interpreter if he or she requests it. Language was not an issue in Singapore because English is the nation’s second language and everyone is required to learn it. They may not have been in South Carolina anymore, but the group felt right at home.


“When I was there I had absolutely no qualms about having any services done at Bumrungrad. I felt like, as long as I could get there, I’d be in fine hands,” says Armstrong.

But how hard is it to get there? Armstrong admits traveling was one of the group’s major concerns. He did feel uneasy about just what to do when he landed in the airport.

When the group did land in Bangkok they were worn out and nervous. Their fears were relieved when they were greeted by a representative from the hospital. They were then taken to a special customs area for those individuals coming over for medical assistance where there was no line. Their bags were picked up and brought to the Bumrungrad welcome center, right there in the airport and they were taken directly to the Bumrungrad suites. The suites are where companions of someone having a procedure stay. Armstrong describes them as beautifully done, reasonably cheap and connected to the hospital.

“The traveling part really wasn’t difficult and it wasn’t difficult getting tickets,” says Armstrong.

The group traveled coach for about $1500 roundtrip — that’s stopping in Thailand and then Singapore.

If they choose to use Companion as their medical tourism service, it will be even easier for employees. Companion works with a vendor called World Access who helps determine what the anticipated cost is, what the recovery time is and transfers all medical files before a procedure is booked, to make sure the hospital can do that procedure. Then the company helps the patient arrange travel and accommodations.


To some advisers the story of Armstrong’s trip may sound outrageous, or at least premature. But it seems people are beginning to look into medical tourism more seriously.

One question that’s often asked about medical tourism is whether it’s more hype than anything else. The idea of saving $60,000 on invasive surgery while sipping fruity drinks in a semi-tropical locale sounds just too good to be true. That it might solve America’s broader health care woes further heightens skepticism.

For those questioning the validity of medical tourism, there are new numbers on the trend from McKinsey & Co.

The firm released a detailed presentation of its research on the subject earlier this spring. And while initial media reaction to McKinsey’s work energized finger-wagging medtour skeptics — its research estimates just 60,000 to 80,000 people are currently traveling for medical services — one of the researchers says the sober analysis should not be construed as pessimism about the market’s potential.

“For us it’s a fact-based view of what the market is today and clearly we think that the potential it has is much bigger,” Ceani Guevara, a consultant for McKinsey, says.

The pessimistic quick read of McKinsey’s findings is understandable. Their estimate of the size of the current market is a fraction of the mass of medical travelers others have tossed around. But Guevara says it’s crucial to understand how McKinsey defines medical travel — patients traveling for the explicit and primary purpose of receiving care outside of their home country. That doesn’t include tourists who happen to get emergency or elective care, expatriate care or individuals who breach borders between contiguous geographies in pursuit of the closest care point.

McKinsey breached more than a few borders itself during its research gathering.

“We were able to go around the world, across four continents to really incorporate findings bottom up from different institutions,” Guevara says.

While McKinsey says there are fewer actual medical travelers, its research demonstrates these patients are satisfi ed, which bodes well for the maturation of the market. That maturation could translate to billions in savings.

“For employers and payers if they were to decide to capture the market going forward and there are many things that means they would need to do, but we’re talking about the fact that they could save on the order of $20 billion dollars in terms of the cost that they have today on the order of 500,000 to 700,000 cases a year,” Guevara says.

Is that enough to convince advisers and employers to tweak their plan designs and cover foreign providers? Maybe, but even if they do that McKinsey’s not sure that will unlock the market’s potential. The financial benefit may not be good enough. Care quality concerns may linger, “handoff” issues may persist, travel may be too burdensome and xenophobia may also still exist.


Still, the potential savings in medical tourism make it worth employer consideration. Rudy Rupak, co-founder and CEO of PlanetHospital, which developed employee benefit SIMPOL, or Self Insured Medical Plans Overseas 4 Less, says employers can only tolerate rising health care costs for so long.

“I was talking to an employer the other day … whose costs continue to go higher than inflation and in the current economy he’s feeling very vulnerable,” says Rupak. “But he may be able to control his premium increases if his employees agree to the option of going abroad for health care.”

Armstrong says there are many procedures that can be done and the total costs can vary widely depending on where the procedure is done, what the procedure is and how long a patient has to stay and recover. Armstrong says total knee replacement is a fairly common and costly procedure among his clients’ employee populations. Normally that will cost between $33,000 and $35,000 and with a good PPO network discount Armstrong predicts the charge would drop down to $19,000.

A total knee replacement in Thailand or Singapore will run anywhere from $9,000 to $10,000 for the surgery and recuperation, he says.

“You’re talking about saving quite a bit of money and if you can structure the deal so both the employer and the employee win in this thing, financially, then I think you’ll have more employees taking a harder look at where they can go to save the most money,” Armstrong says.

He is currently setting up a plan for one of the companies who came on the trip. The challenge he is facing now is what sorts of incentives to build into the plan design to encourage employees to go.

“There are so many different ways to structure this depending on how fast the employer wants to get the employees involved,” says Armstrong.

He is also looking into incorporating medical tourism options into the client’s HRA. They might take the savings from going abroad and dump them into an HRA and then allow employees to roll those funds forward from year to year. One method Rupak is looking at aggressively is partnering with mini-med plan providers.

“The payouts [from mini-meds] are very dismal and not very beneficial to the employees to begin with. However, if those payouts were used for overseas care, the mini-med becomes a major med in terms of its ability to cover major incidences,” says Rupak. “I’ve seen mini-meds where the plan pays out $10,000 for a spinal cord injury of some sort, let’s say a fusion or a slipped disk. Ten thousand dollars doesn’t get you much in this country; $10,000 can get you comprehensive care at another facility.”

Incorporating medical tourism into benefit plan designs is new and best practices have yet to emerge from the early adopters. One thing that is clear is what types of companies will have the easiest time introducing medical tourism into their benefits strategy.

“The companies that will benefit the most from SIMPOL are the self-funded companies. Because if they’re self-funded it’s a no-brainer, depending on their plan design, if they opt to go abroad for care they have a lot more funds leftover in their pool,” says Rupak. “For companies that are not self-insured, who are working with an insurance company, we would tailormake something with the insurance company.”


While the price is right, quality questions are still a primary objection from medical tourism skeptics. Victor Lazzaro, CEO of BridgeHealth International, says a strong network helps create confidence in care abroad.

Lazzaro says their company chooses the facilities in their global network based on quality, accreditation, location, experience of the team, awareness of international needs and English proficiency.

Not only are some Americans nervous about how having a procedure done abroad would effect their health, they question their rights to sue if a procedure goes awry. Liability is also a major objection from employers. Some medical tourism companies are looking into partnering with an insurer to create a product that takes away the liability concern.

“Hospitals abroad carry liability insurance. The doctors carry liability insurance,” says Rupak. “Now, it may not be as high as the outrageous sums that we are accustomed to in this country, but for these countries it’s still high.”

Rupak says the typical Mexican doctor carries a $100,000 liability policy and the hospitals may carry a million dollars per incident.

He also notes another hidden guardian of care abroad — if there was an incident at a facility abroad it could absolutely destroy medical tourism if it was not settled very quickly, says Rupak. The invisible hands of public opinion and the media would also help protect those seeking care abroad.

Employers are interested

Employers are interested

Overall the future looks bright for medical tourism as the trend grows slowly, but steadily. Armstrong says he’s seen increased interest in the last six months and one client will have an employee treated under the plan soon. Rupak’s company has sent one person under the employee benefit model and another will travel abroad for care in November.

“The utilization rate is low at the moment, but that doesn’t concern us because we have this belief in the water cooler effect,” says Rupak. “It just takes one or two employees to go, come back and tell others how excellent it was.”

Reprinted by permission from Employee Benefit Adviser Magazine

Category: News 12 comments »

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