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What happened to those 2008 medical tourism forecasts?

Medical tourism forecast

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.

Comment

Profile of the author

Ian Youngman

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.

 

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Use the comment submission form below
Ian, I have been following your articles for a while and in reality research serves a purpose scientifically or business.

Both Deloitte and Mckinsey are not except from the temptation to whoop up an opportunity for commercial gain.

The exceptional marketer however should not run with the horses, more important is to take a long and good look at just what is really happening in the market. Healthcare is transitioning and reform is being mentioned in the USA, UK, Australia, China and South Africa. This does not mean that they will all flock to Medical Tourism. the decisions made will be on political, economic and by the powerful lobbyists.

The NHS having worked in it always gets spooked and goes into protection and sustaining what we know.

However the NHS in the UK provides a BASIC service to all and I emphasise the basic. It does not do innovation or creativity as they do in the USA. So although we know the US system 48% of the population uninsured at least you can get a diabetic pump there in the UK we are still using the syringe.

No body really knows what is going to happen what we do know is that Healthcare costs have gone through the roof and no western or eastern government can sustain spending at those rates.

What will emerge I believes will be inbound and outbound markets one focussed on reputation of the few (but I believe this will change and competition will grow) and outbound focused on price motivation (but a warning even though price will be important quality will still be right at the top of the agenda.

Marshall Potts, CEO Health Halo Limited

Marshall Potts (01/09/2009 19:59:01)

Ian, great article! I would also point out that the 750,000 and 1.6 million projections have no validity as well.

Moreover, it is not a problem that the industry has a very low performance line, the problem lies in the fact that many key industry stakeholders had used the Deloitte study to try and create an image that medical tourism is this mass market phenomenon in order to attract buy-in. Instead, they have created a false market. It also creates a credibility problem with the patients and consumers. Because if you are misleading them on the size of the market, then, you are mostly likely going to mislead them on issues relating to the quality of care. Or, at least that is how it will be perceived.

Those "so-called" experts who have used the Deloitte numbers in their presentations to promote their company, organization, hospital, sell a book, etc., should have known from day one that those numbers did not reflect the reality of the marketplace. And, now that Deloitte has started to abandon those same numbers as well, it will be interesting to see how these "so-called" experts explain themselves.

Mahatma Davis (28/08/2009 15:43:56)

Earlier this year, WellPoint Inc., nation's largest health benefits company collaborated with Healthbase to provide global healthcare coverage to WellPoint's members.

Things don't change overnight especially when large organizations and large customer bases are involved. But we still feel it's a bold statement and a big step forward as far as the world of medical tourism is concerned.

Healthbase Online Inc. (28/08/2009 02:44:38)

This is a nice dose of reality after the 'irrational exuberance' of the pre-Credit Crunch days. I wonder what Ian has to say about the 'self-insured' or uninsured, or those that chose elective (non-insured) procedures? And how has the 'Crunch' affected cosmetic procedures. I know, I know, those are topics for a whole new article. I hope Ian will write it!

Robert McCaffrey (27/08/2009 16:41:55)

Ian,
While I am bullish on the future of our sector, I also think you are absolutely right in injecting a dose of reality to a patient who suffers from sever “MT Dilution Syndrome”. I must add that your earlier writing about this subject proves that you have been a constant voice of reason about the reality of the medical tourism sector. In other words, you should be crowned “The therapist of the MT Industry”

Much to the regret of the professionals in the value chain of international healthcare; “experts/promoters” with zero experience in healthcare, or international healthcare services, have exaggerated the economic potential of medical tourism.

The message found an attentive audience and resulted in a rush to cash in on "the boom" by foreign providers. This rush created an over supply of under-qualified providers and has commoditized the price of international healthcare. Another side effect has been the “wild west” environment of unqualified “facilitators” which compromises the credibility of the sector and increases risk.

Perhaps your next article should be named:
“MT-Are We Victims of Our Own Expectations?”

Your article may be a the opening shot for consolidation, streamlined value chain and better service for the payer and consumer. I foresee opportunities ahead and our company has forged a strategy that has successfully navigated around the above mentioned challenges and risks.

Keep up the good work.

S. Shai Gold, Managing Partner
Global-Triage
Cross Boarder Treatment in Latin American Centers of Excellence

Shai Gold (27/08/2009 15:32:06)