Darrell Douglas reports on the legal thorns of international medical travel in the USA

 

Blue Ridge Paper Products made headlines in 2004 when one of its employees was stopped from going abroad for medical treatment. Darrell Douglas was its vice-president of paper products.

INTRODUCTION

Speaking to interested parties within the medical travel industry, it’s clear that there is one hope above all others: that Americans will start to travel. Some already do of course, but it’s a trickle at present compared with the true potential. You can argue about the size of the potential market, but when the United States wakes up to the cost savings available abroad, then finally there will be a chance of volume from this great sleeping giant.
 
Or so the argument goes. Of course, some Americans are already travelling. They might be first or second-generation immigrants perfectly comfortable with travelling to their ancestral home for low-cost treatment. They might be business travellers who schedule a treatment alongside a trip, or they might be expatriates, knowledgeable about a country’s healthcare system, and perfectly happy to exploit price differentials. But for the volume to be introduced, employers and insurers have to become involved, and, in the case of unionized companies, unions must be consulted on behalf of the 12-15% of US workers who are represented. Darrell Douglas is one man who knows what that means from an employer’s point of view. Here is the story he told the International Medical Travel Conference in December, 2007… 
 
“This story concerns the time I was vice-president of human resources for Blue Ridge Paper Products. The paper industry struggles to survive day in and day out. I spent 26 years in that industry and what I learned very early on in my career was to get the employee involved. Management may not be always right. They may have the responsibility, but if they learn to listen to their employees, many problems can be solved and generally with better solutions. So I have always practised a high level of employee involvement and engagement in every assignment that I have.
 
Prior to Blue Ridge, I was with a company called Bowater for 12 years. We have an independent streak in the southern part of the United States – we like to solve our problems – and when we can’t get those problems solved by the folks we have hired to help us, we will make changes. I fired the health plan that I had a 38-year relationship with in 1994, because they were not responsive. I fired the consultant from a nationally known firm, because they were not helping me, except at renewal. 
 
I went out and created my own healthcare network of 14 hospitals and 1,500 physicians, and you know how I did it? I trained the employees to go to the doctor’s offices and negotiate prices with those doctors. 
 
Imagine the impact of an hourly employee, an electrician, going into the office manager of a physician’s practice, and saying ‘I’m with Bowater and we’re here to talk to you about joining our network. If you agree with our price structure, and meet our credentialing requirements, we will let you into our network.’ Never had a doctor turn us down. We had 100 per cent participation. 
 
We were the employer of choice. We had high wages and very rich benefits. One of the problems with the paper industry is that we have priced ourselves into a corner in a lot of ways, but we were very successful in making change happen. I have found in my career that the pace of change comes quickest when you are threatened. You really respond when you are in trouble. It’s like putting out a fire. Everyone goes to the scene of a fire and does what they can. So we had a heavy employee engagement process from 1990 to 2002.

When I came to Blue Ridge, we did the same thing. We set up a steering committee – a task force. It was a company of 2,000 employees, six states, over 5,000 covered lives. Not a huge company – but we got them involved in a task force – 50 or so people from all over the company. And we said: ‘Guys, we have a serious problem here.’ Our healthcare costs in 2002 were right at US$8,000 per employee, per year, 95 per cent of which was paid by the employer.

We had a very low contribution rate from the employees towards that. So we said to the task force: ‘We’ve got a serious problem, what are we going to do about it? We need your help, we need your input. Go back to your colleagues on the shop floor, in the plants, the places you work in and come back to us with your ideas. We have some of our own, but we want you to share your’s with us.’ That’s one way we can turn this situation around. We have got to stop the bleeding with respect to healthcare.
 
Over the next five years we put in place some 60 different initiatives, every one of which came through that task force, every one of which was a recommendation from the employees back to the management saying, ‘If you do this, we will support it’. Some of them were painful. Contribution rates were doubled in some plants - some plants had none to start with – and we wound up with everyone sharing some of the 20 per cent of the facsimile premium. 
 
But they were willing to do it because they felt it would help solve the problem. We had initiatives in place such as an on-site medical centre and pharmacy and a chronic care centre. We did a lot of things that were unusual and out of the box and we were proud of some of those things.
 
In 2004, we heard a story on 60 Minutes, on Global Medical Tourism. Someone saw it and brought it to the task force, and they listened to it, looked at it and said: ‘We want to know more. This might be something that some of our members might be interested in.’ So we invited a company from Raleigh, north Carolina called Indushealth (which was on that 60 Minutes show) to come and see us – not our CEO, not the CFO – but they came to see the task force, to share their experiences and bring patients who had been through this – been to India, hip resurfacing, cardiac care – and we were very interested with the quality of care, the attention given.
 
So we decided to launch this, we were self-funded, we put an amendment to our health plan that allowed this to be an option. I was thoroughly ticked off at the healthcare system in our headquarters community. They refused to negotiate with me. We were their best customer, but they refused to give me any break in price, they didn’t want to work with us. ‘Our policy is to shift the cost to the commercial payer because of the underinsured and the uninsured medicare shortfall cost. We want your money so we’re not going to work with you.’
 
That got me mad, so at some part in this process I gave an interview with Time magazine, and all whatever broke loose. I was getting calls day in and day out from media all over the United States. ‘Why are you doing this, what’s going on here?’
 
But as we were doing our due diligence, the next step was to go to India, with a subset of the task force to do an on-site visit. But before that could happen, we had an employee saying: ‘I want to go, I am ready. I have done their own diligence. My fiancée and I have always wanted to go to India, see the Taj Mahal.’ So we said: ‘OK, you can go, and we’ll share the savings with you.’
 
And on the Friday night before he was to leave, the international union from his representatives came to me and said: ‘If you let the guy get on the plane, there’s a judge standing by with an injunction to stop him. We will file NLRB charges against you if you let him get on the plane.’ Not because of the malpractice issue – because they were worried about him not being able to sue like you can in the States, not because they were concerned about the quality of care – but because I had not negotiated the incentives with them. For the past five years I had always put the incentive on the table that employees would benefit by, but in this case the international union said: ‘We are not going to agree with that.’ 
 
So that’s what stopped me in my tracks. The aftermath of that, an awful lot of employees were very upset with their international union. ‘How dare they think they can come in and take this away from us? Isn’t America about choice? You put this as a choice for us. But I had to go around the company.’
 
They had me, they were right. Technically, under the law, I should have negotiated with the international union, not the local union, that these incentives would be in place. Our incentives were to pay the entire cost of the travel for the patient and a companion, the lodging, food, whatever accessories went along with that, and to share 25 per cent of the savings up to US$10,000. And our employees were furious about losing that chance.

So unfortunately, that’s as far as we got. But we did it the right way. Looking back, I would have negotiated with the union ahead of time at the international level, but I didn’t know it was necessary until it was too late. And that’s the story of what happened to Blue Ridge Paper Products when we went down that path. 
 
I retired after that, and now I’m the vice-president of purchasing services for Healthcare Coalition 21, which is a fancy way of saying I help other employers to do the same thing we did at Blue Ridge.”

Darrel Douglas, Vice President, Marketing and Purchasing Services

www.hc21.org 

 

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