Outsourcing Your Heart
Sunday, May 21, 2006 (In
Time.Com, printed in May 29, 2006 issue of TIME)
Elective surgery in
India? Medical tourism is
booming, and U.S. companies trying to
contain health-care costs are starting to take notice
By Unmesh Kher
Whiplash was just the first
agony that Kevin Miller, 45, suffered in a car accident last July. The
second was sticker shock. The self-employed and uninsured chiropractor
La., learned that it would
cost $90,000 to get the herniated disk in his neck repaired. So, over the
objections of his doctors, he turned to the Internet and made an
appointment with Bumrungrad
Hospital in Bangkok, the
marble-floored mecca of the medical trade that--with its liveried
bellhops, fountains and restaurants--resembles a grand hotel more than a
clinic. There a U.S.-trained surgeon fixed Miller's injured disk for less
than $10,000. "I wouldn't hesitate to come back for another procedure,"
says Miller, who was recovering last week at the Westin Grande in
With this surgical sojourn,
his first trip outside the U.S., Miller joined the
swelling ranks of medical tourists. As word has spread about the
high-quality care and cut-rate surgery available in such countries as
Malaysia, a growing stream of
uninsured and underinsured Americans are boarding planes not for the
typical face-lift or tummy tuck but for discount hip replacements and
sophisticated heart surgeries. Bumrungrad alone, according to CEO Curtis
Schroeder, saw its stream of American patients climb to 55,000 last year,
a 30% rise. Three-quarters of them flew in from the U.S.; 83%
came for noncosmetic treatments. Meanwhile, India's
trade in international patients is increasing at the same rate.
That's still a trickle
compared with the millions of surgeries performed each year in the $2
trillion U.S. health-care system. But a
significant shift is under way. It's one that could put greater
competitive pressure on U.S. hospitals as some of their
most lucrative patients are siphoned off. Elective surgeries are key
moneymakers for hospitals, and even a small drop-off can cut deep into
What may accelerate the
trend is that some pioneering U.S. corporations, swamped by
rising health-care costs, are taking a serious look at medical
outsourcing. Blue Ridge Paper Products of Canton, N.C., a manufacturing
company, may soon offer employees outsourcing as a health-care option. The
carrot? The patient would get to pocket some of the firm's substantial
The calculus behind this
interest isn't complicated. Many major employers in the
U.S. are self-insured, which
means they pick up the tab for much of their employees' medical care.
That's why three major corporations that collectively cover 240,000 lives
asked Dr. Arnold Milstein, national healthcare "thought leader" at the
consultancy Mercer Health & Benefits, to assess the best places to
outsource elective surgeries. Procedures in Thailand and Malaysia, he found, cost only 20% to 25% as
much as comparable ones in the U.S.; top-notch Indian
hospitals sell such services at an even steeper discount.
The bottom line: If more
private payers sent patients abroad for uncomplicated elective surgeries,
the savings could be enormous. "This has the potential of doing to the
U.S. health-care system
what the Japanese auto industry did to American carmakers," says
economist Uwe Reinhardt.
hospitals could certainly do with a little global competition. For years,
their share of the national heath-care bill has grown at a rate far faster
than inflation, and today they gobble up a third of all medical
expenditures. At current rates, the U.S. will
be spending $1 of every $5 of its GDP on health care by 2015, yet more
than 1 in 4 workers will be uninsured. The ingrained inefficiency of most
hospitals doesn't help. "A lot of them still don't know how to schedule
their operating rooms efficiently," says Reinhardt. "They've never had to.
They always get paid, no matter how sloppy they are."
That sloppiness, among
other things, widens the price gap with foreign hospitals that
entrepreneurs are exploiting. United Group Programs (UGP) of Boca Raton,
Fla., a third-party administrator that sells a low-premium, bare-bones
form of coverage called a mini--medical plan, this month began promoting
Bumrungrad Hospital as a preferred provider to its customers. Employees of
self-insured businesses who use the more conventional plans designed by
UGP will also have access to the Thai hospital. This means that UGP offers
the option of partly or fully covered medical tourism to some 100,000
people, including those who could use it most.
Mini-med plans are
increasingly popular with contract and hourly workers, who are more likely
than most other workers to be uninsured. But these plans are controversial
because the buyers often think they cover more than they actually do.
UGP's plans at best cap reimbursement for surgery at $3,000 and hospital
stays at $1,000 a day. That would barely cover an afternoon in a
U.S. hospital. But in
Thailand, says Jonathan
Edelheit, UGP's vice president of sales and marketing, a heart bypass that
would cost its U.S. customers $56,000 could be
had for $8,000.
Companies with traditional
plans are also taking the initiative. Blue Ridge Paper, which makes the
DairyPak brand of packaging, was carved out of the forest-products firm
Champion International when its employees bought a few factories that were
scheduled to close. But health-care costs are hurting the company. So a
Blue Ridge team plans to visit hospitals in India to
assess their quality of care. If it gives the green light, Blue Ridge will begin promoting the option to its
Employees who opt for
India would get to take along a
family member, says Darrell Douglas, vice president of human resources,
and the whole experience, including a recuperative stay at a hotel, would
be covered. IndUShealth, a medical tourism start-up in Raleigh, N.C., will
make all arrangements and coordinate care between U.S. and
Indian providers. The sweetener: the company will share with these
intrepid employees up to 25% of savings garnered from the outsourcing.
Get a new hip--and a
rebate. Sounds like a bargain, but would people actually travel 10,000
miles for medical care just to make a few bucks? You bet. Polls
commissioned by Milstein suggest that few consumers would opt for surgery
abroad for incentives below $1,000. But raise the ante above $1,000, and
the equation changes. Among people who have sick family members, about 45%
of the underinsured or uninsured declare they would get on the plane; even
19% of those who have insurance say they're game. Above $5,000, the
percentage of takers climbs to 61% and 40%, respectively.
State governments, which
tend to offer generous health-care benefits, may find those numbers
appealing. A bill in the West Virginia legislature sponsored by delegate
Ray Canterbury outlines incentives for the public employee
health-insurance program that are similar to Blue Ridge's. Hospital
administrators attending the legislative session when the bill came up for
a hearing in February nearly gagged, says Canterbury: "They were not happy. But I
didn't expect them to be. The point is to make them face competition."
Is the quality of care in
foreign hospitals high enough? To cater to an international clientele,
many private hospitals abroad are applying for accreditation (many of them
successfully) from the Joint Commission International, the global arm of
the institution that accredits most U.S.
hospitals. Many of the tourist hospitals teem with surgeons who have
trained in the U.S. or
Britain, which is a
great comfort to American patients (the irony is that 25% of physicians in
the U.S. got their M.D.s abroad).
Escorts Heart Institute and Research Center in Delhi,
for instance, was founded by an authority on robotic cardiac surgery, Dr.
Naresh Trehan, formerly of New York University.
Wayne Steinard, 59, a
general contractor from Winter Haven,
Fla., is one of those U.S.
patients "who fall through the cracks" of the health-care system, as he
says. Steinard landed in New
Delhi last week with his daughter Beth Keigans to
get a clogged artery cleared and a stent installed. Steinard, too rich for
Medicaid and too poor for insurance, certainly didn't have the $60,000 he
would have had to pay back home. So he contacted PlanetHospital, a
Malibu, Calif., medical-tourism agency, and
learned he could get it done for about a tenth as much at Max Healthcare's
Devki Devi Heart & Vascular Institute.
Things have not gone as
Steinard expected. When surgeon Pradeep Chandra scanned Steinard's
angiogram last week, he found the artery 90% blocked. "A stent is out of
the question," he told Keigans. "Your father is going to need a double
bypass, and he needs it immediately." The blood drained from Keigans'
face. While she loved their plush hospital suite and the staff had been
superb, this was all happening too far from home. Steinard, though, was
blunt about his choices. It's either this, he said, or a fatal heart
attack back home. The surgery last week was successful; the hospital's
"I'm not sure I'd ever want
to come back to Delhi," says Keigans, "but I'll be
telling everyone I know to come here if they need surgery. It's not just
the price. They've made everything so easy for us."
Yet India is a
developing country, and this can shake the confidence of even the most
cavalier patient. First-class hotels are in short supply. Beyond that, the
country's crumbling infrastructure and shocking income
disparities--children pick through the garbage outside Steinard's
hospital--make medical tourism seem a tad too adventurous for many. And
for the litigious minded, good luck. The country's malpractice laws limit
damage awards, one of many reasons that health care in India is
But people don't have to be
in Steinard's--or Miller's--straits before they cross borders for care.
Retirees, especially the snowbirds who winter in South Texas and
Arizona, have turned Mexican towns like
Nuevo Progreso (pop. 9,125; dentists, 70), in the Lower Rio
and Los Algodones (pop. 15,000; doctors and dentists, 250), near
Yuma, Ariz., into dusty dental centers. Los
Algodones might rake in as much as $150 million during the winter season.
People from Minnesota and California arrive
in chartered planes to get their teeth fixed in these dental oases. Two
California insurers, Health Net and Blue
Shield, for the past few years have marketed popular health-insurance
plans, aimed at Latinos, that charge lower premiums and cover treatment on
both sides of the border.
Mexico's medical industry is just beginning
to bubble; India's, like its other
outsourcing segments, is booming. Apollo Hospitals, one of the largest
private chains in the world with 46 hospitals in three countries, and
Wockhardt Hospitals Group, which has eight hospitals in
India, are working
through agencies like IndUShealth, PlanetHospital and the Medical Tourist
Co. in Britain to build business
across the West.
Trehan plans to launch next
year, in partnership with GE, the first installment of a vast, $250
million specialty Escorts hospital complex near New Delhi that will
feature luxury suites, a hotel and swank restaurants for patients and
their families. "We will be the Mayo Clinic of the East," he says. Max
Healthcare is also planning a specialty complex in New Delhi (fields:
neurologic, orthopedic, ob-gyn and pediatric).
A corresponding boom is
taking place among Western agencies that funnel patients to Asia. Eight have popped up in Canada,
where national health care can mean a yearlong wait for elective surgery.
In the U.S. several firms are aiming
at the roughly 61 million people who are uninsured or underinsured.
PlanetHospital's founder, "Rudy" Rupak Acharya, says his agency, which in
the past seven months has sent some 200 patients abroad, got 11,000
inquiries in March alone. He has just retained Mercer to help him develop
an insurance plan for the uninsured that will combine primary and
emergency care in the U.S. with surgery abroad.
Patrick Marsek, managing
director of the agency MedRetreat, says his company sent 200 people abroad
last year and is already processing 320 this year. He is demanding a
deposit of $195 from customers because people posing as patients have been
looking for information to start up their own agencies.
insurers join the party? Mohit Ghose of the trade group
America's Health Insurance
Plans says many have taken note of medical outsourcing but are scared off
by the regulatory and legal uncertainties. Aaditya Mattoo, a World Bank
economist who has published a study on the potential of medical
outsourcing, suspects that pure institutional inertia has something to do
with the lack of interest.
Yet as the medical-cost
crisis deepens, the corporations who pay insurers are likely to find the
lure of outsourcing as irresistible in health care as it is in
[End of Article.
Picture and Table Descriptions Below.]
[PICTURES - Pictures
WAYNE STEINARD'S HEART WAS
With no health insurance
and lacking $60,000 for a badly needed operation, Steinard, a 59-year-old
Floridian, hopped onto the Internet and then onto a plane to
... 8,300 MILES LATER, IT'S
... and found out that he
was closer to a heart attack than he had imagined. Steinard had a double
bypass last week in New
Delhi, where he is recovering.
In the U.S.
insurers negotiate discounts, but the uninsured pay retail rates for
medical procedures. Here's how the prices of one surgical tourism agency
compare. Its packages include airfare and hospital and hotel rooms, but
costs can climb if there are complications. [This article contains a table
and a map. Please see hardcopy of magazine.]
Procedure U.S. Insurer's
cost U.S. Retail price India Thailand Singapore Angioplasty $25,704 to
$37,128 $57,262 to $82,711 11000 13000 13000 Gastric bypass $27,717 to
$40,035 $47,988 to $69,316 11000 15000 15000 Heart bypass $54,741 to
$79,071 $122,424 to $176,835 10000 12000 20000 Heart-valve replacement
(single) $71,401 to $103,136 $159,326 to $230,138 9500 10500 13000 Hip
replacement $18,281 to $26,407 $43,780 to $63,238 9000 12000 12000
Hysterectomy $9,591 to $13,854 $20,416 to $29,489 2900 4500 Â Knee replacement $17,627 to
$25,462 $40,640 to $58,702 8500 10000 13000 Mastectomy $9,774 to $14,118
$23,709 to $34,246 7500 9000 12400 Spinal fusion $25,302 to $36,547
$62,778 to $90,679 5500 7000 9000
(U.S. rates, including at least
one day of hospitalization); PlanetHospital (international rates)
With reporting by Hilary
Hylton/Austin, Chris Daniels/Toronto, Aryn Baker/New Delhi, Simon
Montlake/Bangkok, Jenn Holmes/Londo
Industry News items