Saturday, October 14, 2006

Can Medical Tourism Reduce Real and Perceived Malpractice Risk for US Corporations?

I have spoken to scores of physicians, corporations both Fortune size and small, insurance carriers, TPAs, benefits consultants, Governors and legislators on the topic of medical tourism. The underlying theme is that global healthcare is inevitable, desirable, and that new business models need to be created to enable US patients to take full advantage of the emerging opportunities.

What is interesting, is that the very first question is typically "this is really great, I hadn't even imagined this was an option...so how do I sue?"

It is truly amazing how completely intertwined that healthcare and malpractice have become in our collective psyche. But is it also paralyzing us in our ability to make rational decisions regarding healthcare in other countries? Are we making the assumptions that healthcare in another country is just like ours, only less expensive?

Lets examine some of these deep seated fears that have become all part of the US hospital experience, and contrast them to our patient's experiences in India:
  1. Lack of communication
  2. Medical outcomes
  3. Perverse financial incentives
  4. Lottery-sized awards for pain and suffering when there was no medical malpractice
Lack of Communication

Maybe its just me, but I haven't met anyone that really looks forward to a visit to the hospital. We all know that this is a time of great stress for the individual, including the health condition in question and the unknown financial impact of the visit. There are all manner of risk management procedures to address a problem after it arises in a hospital, but typically little effort is invested in addressing problems in real time.

Contrast the typical introduction to the US hospital with a global health option:
  • The prospective patient is immediately in contact with an RN Case manager who begins to understand their medical need, and starts to identify options within our Hospital Partner Network
  • Every question the patient asks is answered, typically involving a collaboration between the RN Case Managers, our Medical Director and attending Physician in India
  • This experience may also be the first time a patient has traveled internationally, or the realization of a life long dream. In any case, there is the aspect of adventure, with all the attendant travel issues that must be addressed in concert with the medical issues.
  • Patients are issued a pre-programmed cell phone, that allows instant contact with the RN Case Manager, and family back home. If there is situation where there is question or unmet need that is not addressed, we are typically able to contact our colleagues at the Indian hospital and address the issue with far greater speed than in the US.
So what might have started out as a small issue...cold food, delayed pain meds, cancelled doctor visit, IV running out, beeping monitors...begin to multiply and are amplified as the hospital stay progresses.

Medical Outcomes

While there are all manner of standard patient forms that a US patient signs to prove he has read the various complications, we all know that not all of the fine print sinks in. The patient is counting on the doctor to do his best job. The only bargaining chip that many patients feel they have is the shield of lawsuit threat. So the the doctor makes nearly every medical decision for the patient haunted by the specter of litigation, and the patient has a malpractice attorney loaded in the cell phone.

A patient that has a good medical result, a good experience and feels they received good value for the money can seem to be quite the exception in the US.

  • The hospitals that are typically involved with international medicine are not really comparable to the typical local hospital that most patients find themselves exposed. The hospitals in our network are chosen for their international reputation for consistently high medical outcomes.
  • Each US patients represents yet another opportunity to showcase India's medical prowess, and they know that the details of each experience will not only be shared with countless friends upon the patient's return back to the US, but may also appear in countless newspapers across the globe.
  • Indian cardiovascular surgeons at our super specialty hospitals typically will have operated on as many cases as a US surgeon has upon retirement, by the time they are 40. This seems to be driven by several factors. Not only is their a vast difference in population of the two countries, but in contrast to the US where cities may have several competing heart centers for a limited number of cases, there is a concentration of heart centers that attract the best surgeons.
  • So instead of a heart center doing hundreds of cases a year...India centers do thousands.
If you take a look at medical outcomes data, the argument can be made that patient may be exposed to a higher risk of complications at the US hospital.

Perverse Financial Incentives

Because of the US healthcare reimbursement system, the hospital has a financial incentive upon the patient admission to get the DRG up on the scoreboard, spend as little as possible in addressing the medical condition that the DRG encompasses, then discharging the patient as quickly as possible. All in hopes of receiving payment at some point in the future. Patients seem to be discharged mid-procedure, many times with wires, hoses and beeping devices still attached, requiring the family to help coordinate home health visits...and on it goes.

Leemore S. Dafny has a great paper (sidebar) Games Hospitals Play: Entry Deterrence in Hospital Procedures Market. And what is surprising conclusion?

"These findings suggest that competitive motivations play a role in treatment decisions."
Ok, not a surprise...and there are countless other citations showing the links between financial incentives and hospital/medical decisions directly affecting the patient.

The discussion of whether this is good or bad thing certainly deserves its own post.

  • The hospital in India has already been paid before a patient even arrives. That's right...payment up front. But the healthcare team has much different goal in mind than their US counterparts. The procedure must be done, with an excellent result, and then recovered to a point whereby the patient can enjoy the plane trip back to the US.
    Can you imagine what our US healthcare system would look like if every third party reimbursement system was replaced with cash over night, and every discharged patient had to recuperate in the hospital or resort until they were able to fly to India?
  • Of course, there are only a certain number of procedures that lend themselves to this model...which interestingly mirror some the most expensive and profitable procedures here in the US. So when we hear the consultants divine the future impact of the medical tourism market, makes sure to listen carefully if they are distinguishing between number of procedures or financial impact to the individual and corporation.
Lottery sized awards

One need go no further than to review the career of former US Senator John Edwards to get idea of how far we have let the system get out of hand. And while the likelihood of a patient or family collecting from the medical lottery is quite remote, a US patient does seem to feel a sense of unease that they do not have their only protective shield when they travel overseas.
  • While the fact remains that a patient would need to bring litigation against an Indian hospital or physician in an Indian court...
    We are at this time, unable to identify a malpractice claim against an Indian hospital or Indian physician by a US patient.
  • Of course, if US patients were followed by news camera crews from the BBC or ABC from patient arrival at the airport to discharge, there might be more similar outcomes.
We need to keep in perspective, that for every $1 million that a lawer puts in his pocket, 70 children could have had heart surgery in India. Its up to America to decide if the system that trades 2,800 pediatric heart surgeries for a trial lawyer's largess is fair.

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In summary then, while there are some topics that need to be researched in the normal course of due diligence, very strong arguments can not only be made for the US patient enjoying a reduced malpractice risk in India, but that corporations could more fully discharge their fiduciary duties by assuring their employess are aware a less risky global healthcare option.

Thursday, October 12, 2006

$2 Trillion Fiscal Hole Requires a Mighty Shovel

Addressing the healthcare needs of individuals and corporations is challenging enough. But the new Governmental Accounting Standards Board rule will kick in next year to reveal underfunded...or over promised...retiree health benefits will cost $1.4 trillion.

This number is a bit too large to comprehend, so lets take New Jersey as an example given by Chris Edwards and Jagadeesh Gokhale. The Garden State's unfunded obligations in its retiree health plan now stand at $20 billion, and the overall costs of the health plan are expected to grow at a rate of 18% annually for the next four years.

Out of 15.9 million state and local workers, 65% are covered under retirement health plans, compared to 24% of workers in large firms in the private sector.

So what are the options available to state politicians as their federal colleagues struggle to finance massive shortfalls in Social Security and Medicare?

Based on our early analysis of state data, and assuming a 20% utilization rate by state and local workers of our global healthcare option program for only seven surgical procedures, state politicians could expect to generate $928 million in savings nationally for the 15.9 million state and local workers.

Conceivably, we could also contribute $2.4 billion nationally for potential savings in state Medicaid programs.

So while $3.3 billion in state retiree and Medicaid healthcare savings might not address the entire issue, one might expect that anyone willing grab a shovel of any size would be welcome.

Wednesday, October 11, 2006

Why Half Way Around the World is Closer Than You Think

It is important to understand that demand for air transport will be driven by global economic growth which will, in turn, contribute to that growth. The need to expand the existing fleet to meet growing demand, plus the need to replace older airplanes with new, better ones, creates a market for 27,210 new airplanes worth $2.6 trillion to be delivered over the next twenty years.

Boeing and their planes have an extraordinary history and have played an integral role in defining America's position in the world. They have made some extraordinary business decisions, such as betting the
company on the 747...and outmaneuvering Airbus with the development of the Dreamliner.

Beyond the ability to create one of the foremost manufacturing capabilities in the world, they have also developed a reputation for very accurate market forecasts (see sidebar). So when Boeing forecasts that demand for airliners from the Asia Pacific region will be greater than North America or Europe, one should take comfort that the numbers are reasonably accurate.

We are entering an age of global air travel where it will be just as easy to fly to New Delhi from Chicago as it is from Raleigh to Moline.

Utopian Characteristics of the Ideal Medical Tourism Destination

There are beautiful places in every country all over the world. Who has not turned the pages of National Geographic and longed to travel to the featured locations? Because of the way the world is laid out and owing to how civilization has populated the continents, the beautiful places...beaches, mountains, forests...are typically not easy to get to. So various levels of lodging adjacent to the beautiful places has sprouted up over time.

Now enter the rapidly growing trends of plastic surgery. Certainly not limited to the popular vanities of America, men and women all over the world seek to not only turn back the sands of time, but reverse the lifelong effects of gravity.

Revealing one's new exterior overhaul to the world the day after surgery truly diminishes the desired effect...so wouldn't it be better to go on a vacation and then return to display the improvements with optimal visual impact?

So where should a bruised and bandaged face or tummy go for a week...Dayton Ohio? Or somewhere with beaches, temples or waterfalls? And when enterprising physicians began to practice near these beautiful places, the Medical Tourism industry was born.

Going to a beautiful place, having a nip here and tuck there in the company of drinks with little umbrellas in the shade of the palms, buoyed by the growing anticipation of reveling in the envy of friends back home does have its attractions.

But what if you or a family member is confronted with the need for a more serious and complicated surgery or procedure? What if you are a corporation seeking a cost effective option for your existing health benefits? Where is the Medical Tourism Shangri-La?

My ideal checklist would include:
  1. The medical outcomes of the physician and hospital would be equal to or better than available to me in the US for my procedure.
  2. There would be a dramatic cost savings
  3. The hospital and physician would meet the same level of quality and service accreditation as hospitals and physicians in the US
  4. Recognition of medical excellence by affiliation with internationally recognized US hospitals
  5. Support by the country's government for developing a medical tourism industry
  6. Proof that the physicians graduated by that country's medical schools are well represented in the American Medical Association
  7. English is spoken by all my caregivers at the hospital
  8. The availability of immediate communications with the US
  9. A wide array of beautiful places to visit
  10. A stable government
  11. A modern travel infrastructure that is easy to navigate
Of course, Shangri-La does not really exist. So of the eleven characteristics, which ones might you be willing to do without?

Edgar Allen Poe Describes the American Healthcare System

Unless you have personally experienced the agony of a healthcare crisis compounded by financial concerns, it is truly difficult to fully appreciate. David Himmelstein observed in his 2005 Health Affairs article that 1.9-2.2 million Americans experienced medical bankruptcy in 2001...and a striking 75% had insurance at the onset of the illness. It is hard to imagine that anyone would believe that these numbers have not increased dramatically since the 2001 study.

If you are a decision maker that is considering the merits of a Medical Tourism option for individuals, whether a corporation or branch of government, I recommend that you take a few moments and read Poe's 1843 short story entitled The Pit and Pendulum.

While I will leave it to the reader's imagination as to which parts of the healthcare system most closely match the options available to the narrator of the story, I would like to believe that the emerging Medical Tourism industry is playing the role of General Lassale.

Tuesday, October 10, 2006

Why Are So Many Americans Uninsured?

How does one go about explaining how the most expensive healthcare system in the world leaves about 18% of its population without the economic and psychological benefits of insurance coverage? Perhaps the most succinct analysis is found in Uwe E. Reihnardt's review (see sidebar) . The major points are:
  1. The phenomenon of the uninsured is an inevitable by product of our employment-based health insurance system.
  2. The nation has not seriously addressed the problem - and it is not likely to any time soon because the uninsured represent a politically and economically marginalized socio-economic class with no leverage in the commercial marketplace.
  3. The public's distaste for bold policy initiatives leaves incremental reform as the only practical alternative, which typically results in chronic policy paralysis.
  4. Although the incremental costs of rendering charitable care are picked up by the insured through various hidden cross subsidies, it is a bargain for insured Americans, because the uninsured receive only a fraction of the healthcare that insured Americans get.
Dr. Reinhardt's fifth point is perhaps the most interesting...
"We are embarking upon yet another round of studies, policy conferences andCongressional hearings on the problem of the uninsured. Although this activity may be perceived as "action," it can be doubted that much more than new bodycounts of the uninsured and some rehashed old proposals will come of the effort."
This quote appeared in the Spring of 2001, when the number of uninsured stood at 40 million.

The 2005 number stands at 46.6 million and will likely top 48 million in 2006.

So where do we find the healthcare system today?

As uncomfortable as the idea may be, America is essentially rationing healthcare coverage by income class. We may never have universal coverage, because that requires cross subsidies from the haves to the have-nots. Through our collective inaction, we are allowing a four tier system to be cemented in place:
  1. For the uninsured, whatever they can obtain in the role of healthcare beggars (often zip)
  2. For Medicaid recipients and low-wage earners in business firms that do offer health insurance, tightly managed HMOs with cost-conscious gate keepers, and if need be, yesterday's technology.
  3. For middle and upper-middle income classes, PPOs with varying degrees of restrictions and costs sharing.
  4. For high-income families...the traditional open ended, completely non-rationed fee-for-service system
And of course, Medicare beneficiaries are being distributed among the upper three tiers.

I forecast that the public debate on the uninsured will increase as the number approaches the 50 million mark, perhaps during the runup to the 2008 Presidential elections. And if recent history is any guide, what do you believe will change?

I think America can do better. So if we want to help those who are marginalized by and disenfranchised from the American healthcare system, what can be done?

Monday, October 09, 2006

An Industry by Any Other Name

Many Americans seem to believe that "Medical Tourism" is a recent phenomenon. And while the soaring costs of healthcare in the US have highlighted the motivations and experience of these early "pioneers," personal travel to centers of medical excellence spans thousands of years.

Depending on where one grew up in America, history commonly began at 1492, 1776, the Alamo in 1836 or upon the firing at Fort Sumpter in 1861.

Perhaps it is the relative newness of our country that leads us to be so surprised that countries such as India could have a 6,000 year head start in the practice of medicine.

Travel agencies have been helping to arrange vacations for patrons of excellent plastic surgeons in exotic locations throughout the world for many years. But with the soaring costs of healthcare, US patients have been seeking increasingly more complicated and expensive surgeries overseas. While the term of "Medical Tourism" doesn't quite do justice to the myriad of components that define the industry, thanks to Google, it is probably going to be with us for a long time.