Ian Youngman from IMTJ looks at some of the predictions and forecasts for medical tourism that were made in 2008, and the harsh reality of how these have turned out. Medical tourism still has a long way to go to become a significant influence on the healthcare market.
There are several 2008 predictions on US and European medical tourism that still get repeated at conferences and in articles, without the speaker or writer bothering to find out the true current situation.
The big prediction last year from Deloitte was that it expected 6 million US outbound medical tourists by 2010. Paul Keckley, director of Deloitte Center for Health Solutions recently drastically revised that projection to 1.6 million people. That compares to the estimated 750,000 Americans who travelled abroad in 2007 for treatment. The far higher predictions for 2012 and 2015 have been scrapped as healthcare reform and domestic medical tourism make it virtually impossible to make accurate predictions that far ahead.
Another prediction was that big health insurers and employers would start sending thousands of employees overseas very soon. The case often used to back up this optimistic prediction is New England grocery chain Hannaford Brothers that has an agreement with insurers Aetna to offer employees in need of hip and knee surgery medical travel to Singapore. This is Aetna’s only pilot. At the launch over a year ago there were predictions that Aetna would offer a similar deal to other business customers and the supermarket would extend the offer to other countries. So what has happened? The scheme attracted the attention of several hospitals in Boston who then offered to match the price. So the scheme has not been extended it to any other country. So far, in 18 months, three patients have benefited from the competitive pricing but Hannaford has sent no one overseas, even though the programme pays travel and accommodation costs for the patient and a companion. Aetna is far from convinced of the need for insured medical tourism and has no plans for more pilots or wider use of it.
The four largest commercial American health insurers, who between them cover 100 million people have either launched pilot programs offering overseas travel or explored it. None of the big four have plans to introduce it .The most they will do is consider it if the business customer and their health insurance broker make a case for it. In June, CIGNA released a podcast on medical tourism.
The podcast makes it clear that the insurer is concerned about medical liability and medical malpractice outside the US, and that while in the future the insurer may consider developing international health packages for some customer groups that include the option of medical tourism, the insurer has no interest in adding medical tourism to existing insurances.
Some people predicted that it would be the smaller insurers and agencies that would make business insured medical tourism happen. BasicPlus Insurance Services, which underwrites and provides group health insurance plans to employers, started offering medical tourism as part of a benefits package last year. About 200 employers with whom it contracts around the country now offer that option, but no patients have used it. Other insurers and agencies announcing overseas deals with great fanfare are unwilling to talk numbers as feedback suggests that they have either sent nobody overseas, or just a tiny handful.
Meanwhile, the insurance industry’s exploration of overseas care has had the effect at home that the insurers wanted: an increasing number of hospitals are offering discounted packages to counter the foreign competition. Health care costs for employers who offer insurance to their workers are projected to rise 9.2 percent this year and another 9 percent in 2010, according to the consulting firm PricewaterhouseCoopers. That could mean double-digit percentage increases for employees through higher premiums, deductibles or co pays.
Every month, we see either an existing medical tourism agency offering a US network, or another player doing the same. They all have one thing in common, although happy to accept individual bookings, the real target is small to medium sized businesses, preferably self insured ones, as insured ones may be tied exclusively to their insurer’s domestic network. Olympus Managed Health Care has been bringing foreign individuals into the US for medical care since 1994.Olympus has grabbed the opportunity to use its existing infrastructure of 29 top domestic providers to market to insurers, administrators and self-insured employers that are looking to achieve the cost savings of medical tourism without leaving the country.
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. This is both attractive to businesses and a major reason why Deloitte has dramatically reduced the projections for outbound medical tourism. One of the primary reasons some hospitals are willing to be paid less is that they are generally paid upfront, before the procedures are carried out, which enables them to avoid the arduous task of seeking reimbursement afterward from insurers and third-party administrators. The price is usually negotiated on an individual basis, getting round the hospital's managed care contracts with PPOs and health maintenance organizations. Because of the potential savings of domestic medical tourism, employers usually offer employees financial incentives such as waived or lower deductibles and co-payments, as well as travel allowances for the employee and a companion.
Turning to Europe.....
One common 2008 prediction was that European insurers would start to embrace medical tourism. Across the EU, with rare exceptions, few have even considered medical tourism, let alone embraced it.
In the UK, the problems in the NHS led several countries and overseas hospitals to predict that local NHS hospitals would welcome the opportunities presented by medical tourism. They have all been disappointed. Even some UK private health groups have virtually given up trying to get business directly from the NHS. The government department controlling the NHS has quietly made it plain that the use of medical tourism by hospitals to reduce waiting lists would be an admission of failure by hospital management. The UK authorities are so opposed to medical tourism that they are fighting a rearguard action against planned EU healthcare freedoms.
All these show how quickly events can drastically alter predictions. Those countries and organisations making bold and overconfident predictions of future growth, may not be taking enough account of not only how many countries are fighting for medical tourism custom, but that hospitals threatened with losing lucrative business to overseas, may fight back.
Ian Youngman is a writer and researcher specialising in insurance and health. He writes regularly for a variety of magazines, newsletters, and on-line services. He also publishes a range of insurance reports and undertakes research for companies. An ACII, with an honours degree in Economics from the University of Liverpool, Ian was a co-founder of The General Insurance Market Research Association. He also has widespread experience within the insurance industry at management level, working for brokers, a bank and an insurance company.