Medical Tourism Can Generate 20% to 80% Savings for Employers

Date Posted: March 3, 2010 - THOMPSON

Medical tourism, originally the domain of uninsured consumers willing to travel for cheaper medical care, is becoming a popular option among employers/plan sponsors, which have noticed the substantial cost savings and want in on the action.

There is growing interest by self-funded and fully insured employers in offering medical tourism as an option in their benefit packages. In medical tourism, patients go overseas for hip replacements and other non-emergency procedures. The patients often combine the treatment with a vacation, then return home for follow-up care.

Cost savings range from 20 percent to 80 percent, according to Renee-Marie Stephano, president of the Medical Tourism Association in West Palm Beach, Fla. "It's a large value, and often the foreign surgeon was trained in the U.S. and is just as, if not more, experienced in the procedure," she explains. For instance, hip resurfacing has been performed in other countries for years; it has only recently been approved in the United States.

Substantial Growth Anticipated

Insurance-covered medical tourism isn't new, but it's becoming more prominent as the industry matures and employers are less afraid of antagonizing local providers by publicly offering it, according to Paul Keckley, Ph.D., executive director of the Deloitte Center for Health Solutions, Washington, D.C., According to Keckley, several trends are fueling the demand for medical tourism, including:
Factoring in further increases in health care costs over the next decade, Keckley anticipates medical tourism will grow 35 percent a year. U.S. citizens left the United States for about $1 billion in health services in 2008, he adds.

Employers and plans can offer employees incentives for using the option, such as a cash bonus or waiver of copayments, and still realize thousands of dollars in health plan savings, Stephano indicates. Other incentives include hotel and meal expenses, passport and visa expenses, transportation expenses and translation expenses, notes attorney Howard Bye, with Stoel Rives, Seattle.

"Offering this option also reduces employee absenteeism and improves employee retention. It's goodwill," Stephano points out. "And it's a great opportunity for an employer to be competitive in the marketplace," she adds.

Insurers Take Notice

While medical tourism has garnered attention from self-funded employers, fully insured and group health plans aren't ignoring the trend. Deloitte's study reports that several insurers — such as Anthem Blue Cross and Blue Shield (WellPoint), Health Net of California, Blue Cross Blue Shield of South Carolina, and UnitedHealth — have added medical tourism products or launched pilot programs.

"Blue Cross Blue Shield is traditionally conservative. It shows that insurers are figuring this out pretty quickly. It's a no-brainer. The price points are so dramatic," notes Peter Hayes, CEO of consulting firm HC Solutions in Scarborough, Maine.

For more information on reducing employer health costs, read Reducing Healthcare Costs for Employers from Thompson Publishing Group.

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