New Zealand insurer rejects medical tourism


New Zealand insurer Southern Cross has undertaken a study of medical tourism. It is not convinced that it could save money by taking patients overseas. But flying them around New Zealand to get the best medical deal is a good idea.

A report from health insurer Southern Cross argues that once travel and accommodation costs are included, the cost savings of medical tourism are not tempting for policyholders for any but the most expensive procedures. But, says the report, only 15% of policyholders would consider travelling overseas for treatment.

Flying policyholders around New Zealand in search of cost savings will be accepted. Many are used to travelling for medical procedures, particularly those who live in rural areas. As health insurance premiums have risen, many customers have switched to shared costs policies where they pay a substantial portion of the costs of each procedure.

The report by Stephen McKernan of Health Partners Consulting Group says that overseas travel costs would mean savings of around only 1% given New Zealand's geographic isolation from low-cost Asian countries such as India and Thailand. But, travel for procedures within New Zealand could save money. Costs can vary dramatically around the country and in many cases there appears to be no good reason for those differences.

After considering the report on medical tourism, Southern Cross Healthcare sees internal medical tourism as a way of steering surgical volumes away from high-cost providers to lower cost providers. But Southern Cross says that although internal medical tourism is a possible cost-control mechanism, it is currently only being explored. It wants to see if it can make it part of the existing development of a network.

Southern Cross's main mechanism for gaining greater control over claims costs is the building of a network of affiliated providers who agree to certain prices and limits on future price increases, in return for business from the insurer. For an increasing number of procedures, the insurer will only authorize and pay for treatment by a network provider.

New Zealanders do self-pay for overseas medical tourism. But this is mostly cosmetic surgery, dental and optical treatment – which most insurance policies do not cover. Few travel overseas for surgery.



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