tourism

Healthcare Reform

Domestic Medical Tourism on the Rise

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tourism

An increasing number of employees are being faced with a question when it comes to non-emergency surgical care: stay close to home and pay a portion out of pocket, or travel to another U.S. facility and pay nothing?

In an effort to control the rising costs of health care, more employers are implementing surgical benefit programs that encourage their employees to receive care at facilities with proven outcomes, even if they’re hundreds of miles away. It may seem counterintuitive that the employers are sending their employees to the best facilities in the country and saving money at the same time. But, as one industry insider said, it’s indicative of a health care industry that has a flawed pricing system and a lack of transparency.

“Given the bizarre pricing model that exists for health care services in this country, there is actually a negative correlation between quality and price,” said Terry White, president of BridgeHealth Medical, a surgical benefit management company in Denver, Colo.

Also referred to as “medical tourism,” the trend of employees traveling for care is catching on among self-insured employers. Some of the largest companies in the U.S. including Walmart, Boeing and Lowe’s, are giving their employees the option of traveling, sometimes hundreds of miles away, to get care from facilities considered to be the best in the nation.

A Burgeoning Industry

The trend has also led to the rise of companies such as BridgeHealth that broker these deals for the employers.

Employers and brokers look to facilities that have proven outcomes for particular procedures. They negotiate bundled, fixed-rate prices that are generally 20 to 50 percent below rates charged through traditional insurance plans. BridgeHealth guarantees its clients that the cost savings will at least equal the fees they pay to BridgeHealth. “But, beyond that, we think it’s achievable to reach [savings up to] ten times.”

White said while well-known brands, such as the Mayo Clinic or Cleveland Clinic, are known for their quality, there are also small facilities that have top quality scores but not the name recognition the larger facilities might have. Facilities in BridgeHealth’s network are always rated in the top 25 percent for the particular procedure covered by the plan, White said.

Quality of care directly impacts the amount of money an employer can save, explained Jonathan Edelheit, CEO of the Medical Tourism Association, a trade group for medical tourism companies. The hospitals with which employers negotiate are so confident of their outcomes, the negotiated rate usually includes any additional costs that may arise from complications. Fewer complications mean less recovery time and less time away from work, Edelheit said.

The medical tourism trend started several years ago with a focus on the international market. The focus has since shifted to domestic travel.

An Easier Sell

White said traveling within the U.S. is an easier sell to employers and their employees than international medical tourism was. It’s also a better business model, he said. Companies like BridgeHealth can assess the quality of stateside hospitals much easier than those abroad because of the quality reporting requirements in place in the U.S., according to White.

White said there’s been a steady uptick in the domestic travel industry over the past couple of years. Not only are more employers adding surgical benefit options to their employee health plans, but long-term BridgeHealth clients are adding more procedures to their benefit packages.

While there will always be a population of people unwilling to travel for care, others are being enticed by waived co-pays and deductibles. Many companies are also covering the cost of travel for the patient and a companion and a few even offer cash incentives to those willing to travel.

Closer-to-home Options

Thomas Johnston, CEO of EmployerDirect Healthcare, an Austin, Texas-based surgical benefits provider, said his employer clients have found that while many patients are willing to travel for care, they are unwilling to get on an airplane. Most of the agreements his company brokers are between companies and health care providers that are within a 100-mile radius of one another. Johnston said EmployerDirect looks first at the surgeon, analyzing data including patient volume, complication and infection rates. The chosen surgeon then helps negotiate a bundled rate at a facility he is contracted with.

Johnston is betting that finding closer-to-home options will ultimately lead to growth in the medical tourism industry. Given the increased interest expressed by employers, Johnston is forecasting his company will double the number of lives covered next year to reach half a million.

Edelheit expects to see an overall 20 percent increase in the number of employers implementing medical travel programs in 2014. Many were watching from the sidelines as Lowe’s and others implemented their programs, he said. As those companies expanded their offerings, the ones watching and waiting started to ask how they, too, could implement similar programs.

“The other reason domestic medical tourism is really going to take off is health care reform doesn’t lower costs,” Edelheit said. “It doesn’t reform medical malpractice, pharmaceutical and medical supply costs. So as the costs are going up and employers see it and know it’s coming, they have to do something innovative to lower the costs,” he said.