MEDICAL TOURISM: A LOOK INTO THE PHENOMENON
by
Oluwabukola Omotade
BS, Community Health, University of Maryland, College Park, 2012
Submitted to the Graduate Faculty of
the Department of Health Policy and Management
the Graduate School of Public Health in partial fulfillment
of the requirements for the degree of
Master of Health Administration
University of Pittsburgh
2015
UNIVERSITY OF PITTSBURGH
GRADUATE SCHOOL OF PUBLIC HEALTH
This essay is submitted
by
Oluwabukola Omotade
on
April 17th 2015
and approved by
Essay Advisor:
Julia Driessen, PhD
______________________________________
Assistant Professor
Department of Health Policy and Management
Graduate School of Public Health
University of Pittsburgh
Essay Reader:
Jeremy Martinson, PhD
______________________________________
Assistant Professor
Infectious Diseases and Microbiology
Graduate School of Public Health
University of Pittsburgh
ii
Copyright © by Oluwabukola Omotade
2015
iii
Julia Driessen, PhD
MEDICAL TOURISM
Oluwabukola Omotade, MHA
University of Pittsburgh, 2015
ABSTRACT
Medical tourism is an up and coming phenomenon in the globalization of the healthcare
market with implication on the healthcare industry.
The CDC reports that up to 750,000
Americans travel outside of the United States to receive medical care and studies show that this
number has trended upwards over the last several years.
Medical tourists outsource their
healthcare services to decrease the financial burden of healthcare, to reduce wait times and to
access quality healthcare services unavailable through their insurance company. However, while
the advantages of medical tourism are identified, research also highlights the uncertainties and
misconceptions associated with the phenomenon. As more individuals opt out of receiving
healthcare in their own developed countries and choose to travel abroad to receive healthcare
services in developing countries, the risks and benefits of medical tourism are emerging and
necessitates consideration of the role medical tourism will play in the future of the healthcare
market. In addition, as medical tourists return home to their developed countries after receiving
treatment abroad, medical tourism is significant to the public health field as it impacts the overall
population health in developed countries. Depending on the efficiency, quality and effectiveness
of care received by international providers, medical tourism can aid in improving the health
status of those in developed countries, which is, essentially, the overall goal of public health.
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TABLE OF CONTENTS
PREFACE .................................................................................................................................... IX
1.0
INTRODUCTION ........................................................................................................ 1
2.0
WHY MEDICAL TOURISM ..................................................................................... 3
2.1
THE UNMET NEED ........................................................................................... 3
2.2
INCREASING HEALTHCARE INFLATION RATES .................................. 4
2.3
DESTINATIONS AND COSTS ......................................................................... 5
2.4
LONG WAIT TIMES.......................................................................................... 7
3.0
PREFERRED NEED AND DECISION-MAKING .................................................. 8
3.1
4.0
MEDICAL TOURISM ENGAGEMENT........................................................ 10
ISSUES IN MEDICAL TOURISM .......................................................................... 12
4.1
INTERNATIONAL ACCREDITATION ........................................................ 13
4.2
ASSESSING QUALITY OF MEDICAL PROVIDERS ................................ 13
4.3
CONTRACT THEORY IN MEDICAL TOURISM ...................................... 14
4.4
5.0
4.3.1
Information Asymmetries ............................................................................. 15
4.3.2
The Agency Theory ....................................................................................... 16
ADOPTING TECHNOLOGY AND NEW INNOVATIONS ........................ 16
OUTSOURCING SURGICAL PROCEDURES ..................................................... 18
5.1
COST-SAVINGS IN MEDICAL TOURISM ................................................. 18
v
6.0
THE INSURANCE INDUSTRY............................................................................... 20
7.0
MEDICAL TOURISM AND THE FUTURE OF THE HEALTHCARE
MARKET..................................................................................................................................... 22
8.0
7.1
GLOBALIZATION OF THE MARKET ........................................................ 23
7.2
COORDINATION OF CARE .......................................................................... 26
CONCLUSION........................................................................................................... 27
BIBLIOGRAPHY ....................................................................................................................... 29
vi
LIST OF TABLES
Table 1. Medical Tourism Destinations .......................................................................................... 6
Table 2. Cost Comparisons of Surgical Procedures...................................................................... 19
Table 3. Differences between bi-lateral trade and multi-lateral trade agreements ....................... 24
vii
LIST OF FIGURES
Figure 1. Medical Tourists’ Sequence of typical decision-making process ................................... 9
Figure 2. Trends in Revenue from Medical Tourists in Thailand, 2006-2012 ............................. 25
viii
PREFACE
I would like to thank God for seeing me through. Thank you to my family and friends for their
love and support. Thank you to the Department of Healthy Policy and Management. I hope to
make you all proud.
ix
1.0
INTRODUCTION
As the cost of healthcare continues to increase in developed countries, the phenomenon
known as medical tourism has become more appealing to individuals in developed countries as a
means of decreasing the financial burden of healthcare and access services not offered in their
home countries under their insurance coverage. Medical tourism is the outsourcing of medical
services, mainly expensive surgical procedures, to lesser-developed countries, such as India and
Thailand, for access to healthcare at a lower cost (Bies, 2007). While medical tourism has
always been an option, it has grown as a phenomenon in the 21st century, as healthcare inflation
rates have steadily increased. On a macro scale, it is reported that the United States spent 17.9%
of its Gross Domestic Product (GDP) on the healthcare sector.
This number has grown
significantly over the years, as only 15.9% of the GDP was attributed to the healthcare sector in
2006 (World Health Organization, 2012). As the expenses associated with healthcare have
increased, out-of-pocket expenditures have also risen. The Centers for Medicare and Medicaid
Services (CMS) reports that “in 2012, out-of-pocket spending is estimated to have grown 4.1%
to $320.2 billion, compared to 2.8% growth in 2011” (CMS, 2013). While legislation, such as
the Affordable Care Act, aims to reduce the burden of healthcare costs in developed countries,
immediate results are not expected and healthcare costs are expected to continually trend upward
(CMS, 2013). This increased financial burden has prompted people in developed countries, such
as the United States, to seek healthcare overseas in an effort to avoid high prices. As a result,
1
more individuals are traveling to developing countries to undergo medical procedures such as
coronary artery bypass surgery, bariatric surgeries, and heart valve, hip or knee replacement
procedures (Britnell, 2011).
The CDC reports up to 750,000 Americans travel outside of the United States on an
annual basis to receive medical care overseas as some procedures cost only 10% of the cost of
comparable care in the United States (Waiker & Cappel, 2011). As an effective method of costsavings for patients in developed countries, medical tourism is recognized by healthcare
organizations and the insurance industry as a feasible option for patients who want to lessen the
financial burden of their preferred healthcare treatment. In addition, individuals are turning to
medical tourism to reduce long wait times in developed countries and to access services, such as
cosmetic surgeries, that are not apart of their insurance coverage (Bies & Zacharia, 2007).
However, while medical tourism can benefit all parties involved, there are concerns such as
assessing quality of care and ensuring overseas destinations adopt new technology and maintain
state of the art medical practices. This paper examines medical tourism and analyzes the
associated risks and benefits from the perspective of both the individual and the United States’
healthcare market.
2
2.0
WHY MEDICAL TOURISM
Most people understand medical tourism as instances where those in developing
countries leave their home to receive medical care in developed countries, such as the United
States, Germany and the Netherlands (Runnels & Carrera, 2012). However, medical tourism has
become bidirectional and there has been an emergence of individuals leaving developed
countries to receive care in developing countries. The United States is the largest exporter of
health care with up to $2.3 billion dollars saved in 2012 as a result of Americans seeking
healthcare overseas (Runnels & Carrera, 2012). In understanding this form of medical tourism,
it is evident that individuals engage in medical tourism to fulfill an unmet need, decrease their
financial burdens and avoid long wait times in their domestic health system
2.1
THE UNMET NEED
While there are many reasons for one to seek healthcare outside of their immediate
community, the heart of the phenomenon known as medical tourism seems to stem from an
unmet need for healthcare in one’s local environment (Runnels & Carrera, 2012). This unmet
need can be for “a medically necessary treatment which is inaccessible domestically (i.e.
resulting from lack of/ insufficient health insurance coverage) or rationed according to urgency
(in the case of publicly funded elective treatment) to one that does not resolve a health problem
3
but may improve an individual’s sense of wellbeing” (Runnels & Carrera, 2012). Regardless of
which circumstance is apparent for an individual, medical tourism serves as a way for the
individual to get their desired healthcare service at a reduced cost and fulfill their unmet need.
2.2
INCREASING HEALTHCARE INFLATION RATES
As mentioned earlier, the increasing cost of healthcare in developed nations is one reason
that individuals in these countries are seeking their care elsewhere. Auerbach and Kellerman
(2011) report that “although a median-income US family of four with employer-based health
insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009, this
gain was largely offset by increased spending to pay for health care.” In 2009, the averageincome family in the US saw an increase in their monthly insurance premiums, out-of-pocket
expenditures and taxes associated with healthcare from $490 to $1,115, $135 to $235 and $345
to $440, respectively (Auerbach & Kellerman, 2011). As the inflation rate within the healthcare
sector exceeded the overall inflation rate in the United States, people living in the US are,
realistically, taking home a smaller amount of their annual income due to the rise in healthcare
costs. This occurrence has prompted individuals in developed countries to seek healthcare
overseas at much lower costs, primarily for the more expensive surgical procedures (Bies &
Zacharia, 2007).
4
2.3
DESTINATIONS AND COSTS
Patients seek care in less developed countries for more expensive cases or cases that are
unavailable from their local provider based on insurance coverage and specialization (Britnell,
2011). This form of “medical tourism is fundamentally different from the traditional model of
international medical travel where patients generally journey from less developed nations to
major medical centers in highly developed countries for medical treatment that is unavailable in
their own communities” (Horowitz, Rosenweig, Jones, 2007). Instead, patients from highly
developed countries, such as the United States of America and the United Kingdom (UK), are
travelling to developing countries, such as India, Malaysia, Singapore and Thailand, for
“cosmetic surgery, dental procedures, bariatric surgery, assisted reproductive technology,
ophthalmologic care, orthopedic surgery, cardiac surgery, organ and cellular transplantation and
gender reassignment procedures” (Horowitz et al., 2007). While these procedures are available
in developed countries, they are often more expensive, comparable to developing countries. In
addition to being more expensive, some of these procedures, such as cosmetic surgery and
gender reassignment procedures, are not covered through most insurance plans.
Patients
interested in these types of healthcare services would face the actual cost of care in their
developed country, which may be higher than their willingness to pay and more expensive than
the actual cost of care in developing countries. As a result, individuals turn to medical tourism to
avoid financial straits in accessing their desired healthcare service, discussed later in this paper
(Horowitz).
Table 1 depicts the most common destinations for medical tourism (Horowitz et al.,
2007). In the majority of these destinations, healthcare is more affordable, with prices as low as
10% of the identical service in the United States (Horowitz et al., 2007). Developing countries
5
are able to offer lower prices because the cost of healthcare is directly correlated with the per
capita gross domestic product for the nation. Horowitz et al. (2007) report that “the charges for
healthcare services are appropriate for the level of economic development in which the services
are provided.” In addition, these low prices are not only a result of a nation’s economic status
but also attributed to “low administrative and medicolegal expenses for overseas practitioners”
(Horowitz et al., 2007). In India, the professional liability insurance premium for a surgeon in
India is 4% of that for a surgeon in New York, USA (Horowitz et al., 2007). These low prices
appeal to patients who are relatively price-elastic. However, while the price of healthcare across
borders may be appealing to patients trying to save money or access healthcare services with
inadequate insurance coverage, skepticism exists around the quality of healthcare provided with
respect to the standard of care, the skillset of healthcare providers and advancement in
technology.
Table 1. Medical Tourism Destinations
Horowitz, M. D., Rosenweig, J. A., & Jones, C. A. (2007). Medical Tourism: Globalization of the Healthcare Market.
Medscape General Medicine, 9(4), 33-41. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles
6
2.4
LONG WAIT TIMES
Surgical procedures such as transplants, hip or knee replacements and coronary bypass
surgeries are the most common procedures that individuals choose to outsource as a result of
long wait times. In 2009, there were a reported 104,827 total patients on the transplant waiting
list for a kidney transplant and 15,876 for a liver transplant (Schiano & Rhodes, 2010). Schiano
& Rhodes (2010) report that “the number of patients requiring solid organ transplantation
increases every year” and, naturally, as this number increases, the wait time for a much-needed
surgery increases also. For example, “wait lists for hip replacements can stretch to as long as 1
year in Canada, where as patients with the financial resources to pay for this procedure can have
it done immediately in countries such as India and Thailand” (Snyder, Crooks, Johnston,
Kingsbury, 2011). Research reports that the United Kingdom’s wait times for such procedures
range from three months to over a year while the wait times at medical tourist destinations in
developing countries is basically zero (Waiker & Cappel, 2011). The opportunity for immediate
care appeals to individuals in need of urgent care, further appealing to patients considering
medical tourism.
These various drivers of medical tourism speak to an overall perception that patients
cannot acquire the healthcare they need in their home countries. As the healthcare system
available to an individual plays a major role in the extent to which their needs are actualized,
perceived shortcomings of the local healthcare delivery system drive the engagement in medical
tourism.
7
3.0
PREFERRED NEED AND DECISION-MAKING
Encompassing the areas of financial constraints, unavailability of preferred treatments,
cost advantages and measuring quality of care, the road to medical tourism involves a decisionmaking process that ultimately involves patients choosing between domestic and international
providers. In other words, “information about need, treatment modalities available and options
for treatment abroad are core elements in the decision to seek treatment at home or abroad”
(Runnels & Carrera, 2012). Prior to embarking on the decision-making process, patients either
discover medical tourism on their own or consult with their primary care provider to discuss this
alternative. Figure 1 illustrates the decision-making process for choosing between domestic and
international healthcare services (Runnels & Carrera, 2012). This figure depicts the decisionmaking process of patients who are unfamiliar with medical tourism but have identified a
medical need. Patients in this category are usually those who have heard about medical tourism
through a relative who’s engaged in medical tourism or third party familiar with the industry,
such as an insurance company (Runnels & Carrera, 2012). After patients have identified a need,
they choose their preferred method of treatment after weighing the risks and benefits of all
possible treatment options. Once the method of treatment is chosen, patients decide whether to
receive their healthcare locally or internationally.
This decision depends on cost of care,
timeliness of care, insurance coverage, preferred taste and quality of healthcare (Runnels &
Carrera, 2012). In the event that patients choose outsource their medical care, patients consult
8
Runnels, V., & Carrera, P. M. (2012). Why do patients engage in medical tourism?.
Maturitas, 73(4), 300-304.
Retrieved from www.maturitas.org/articles/S03785122(12)00274-5/abstract
Figure 1. Medical Tourists’ Sequence of typical decision-making process
9
with an identified foreign provider about their treatment options and decided whether or not
medical tourism is a feasible option. In the case that a patient learns about medical tourism
through their primary care provider, they are likely to start the decision-making process at the
point labeled Consult with local physician, as seen in Figure 1. The rest of the process follows
the same procedure as a first-time medical tourist who has investigated medical tourism
independently. Despite what stage of the process a patient starts from, the decision to engage in
medical tourism requires many steps and involves patients making informed decisions as they
journey to fulfill their identified need.
While the delivery of healthcare in medical tourism occurs in non-domestic locations, the
post-operative recuperation period occurs back in the local healthcare environment of the
individual. This suggests “the domestic healthcare system (primarily) deals with any adverse
outcomes following any temporary exit of patients” which ultimately makes the local healthcare
organization responsible for the healthcare a patient received abroad (Runnels & Carrera, 2012).
This aspect of medical tourism promotes the globalization of the healthcare marketplace as the
responsibility and coordination of care for the patient involves both the outside provider and their
domestic providers. While there are benefits to increased globalization in the healthcare market,
negative consequences are possible if stakeholders of a patient’s local health care organization
are against this new trend of medical tourism.
3.1
MEDICAL TOURISM ENGAGEMENT
Social, economic and medical factors influence an individual’s decision to engage in
medical tourism and affect a patient’s readiness for engagement (Bies & Zacharia, 2007). In
10
medical tourism, “social factors range from psychological factors, well-being and social class,
economic factors include costs and medical factors include quality of health care and seriousness
of the condition” (Bies & Zacharia, 2007). As these factors vary and can be quite complex,
researchers have found that there is no clear answer about whether or not medical tourism should
be promoted in developed countries. However, there are implications of medical tourism that
can benefit developed countries by decreasing the amount of GDP spent on the healthcare sector.
However, this could potentially cause hospitals to suffer financially, as a decrease in volume
directly impacts a hospital’s income from operations (Bies & Zacharia, 2007). In addition, as the
post-operative care of a medical tourist is the responsibility of the local provider, individuals
may be hesitant to engage in medical tourism if they are worried about coordination of care
(Runnels & Carrera, 2012). In developed countries, patients are used to one or two providers
managing their medical care from pre-service to point of service to after-service. As medical
tourism alters this norm, patients who prefer familiarity may opt out of medical tourism after
realizing the full scope of how healthcare is provided.
11
4.0
ISSUES IN MEDICAL TOURISM
There are risks associated with medical tourism, especially for those patients acting as
medical tourists for the first time. One of the major issues surrounding medical tourism is how a
medical tourist measures quality and safety of care at an international destination. Because they
are “faced with the choice of many medical institutions in diverse countries, medical tourists
may find it very difficult to identify well-trained physicians and modern hospitals that
consistently provide high-quality care” (Horowitz et al., 2007). As the patients searching for
physicians overseas are usually unfamiliar with the healthcare specifics of that nation, assessing
the efficiency and accuracy in the delivery of healthcare services can be a difficult task. The
quality of care a patient receives abroad is important to the patient as it has implications for the
state of a patient’s post-operative recuperation period and long-term health status. As this period
is the responsibility of a patient’s local healthcare provider, the quality of care received abroad
affects healthcare systems in developed countries, especially if the healthcare provided abroad
was not equivalent to the developed country’s standard of care. However, contrary to what some
may believe, the lack of economic development in medical tourists’ destinations does not
directly imply inferior healthcare delivery (Bies & Zacharia, 2007).
12
4.1
INTERNATIONAL ACCREDITATION
As the phenomenon of medical tourism has expanded in the 21st century, many
organizations have sought accreditation from The Joint Commission International, which has
accredited more than 125 facilities in 24 countries worldwide (Horowitz et al., 2007).
Accreditation boards, such as The Joint Commission International, Accreditation Canada
International and the Australian Council on Healthcare Standards International, are recognized
by the International Society for Quality in Health Care – an organization that accredits external
healthcare organizations by assessing their standards and their surveyor training (Runnels &
Carrera, 2012). Hospitals in developing countries accredited by any of the aforementioned
accreditation boards provide individuals better sense of the quality of medical care at that
institution.
In other words, these “accreditation bodies ensure that hospitals are providing
services that comply with national and international standards, giving signal to potential
consumers that the care offered by these hospitals would be comparable to that provided by their
home facilities” (Smith, Alvarez & Chanda, 2011).
4.2
ASSESSING QUALITY OF MEDICAL PROVIDERS
Accreditation serves as evidence that an organization has qualified individuals delivering
healthcare services in a medical facility. Research proves that “a substantial number of the
physicians in medical tourism destinations received postgraduate training in industrialized
nations, have board certification (or equivalent), and may have practiced in the country where
they completed their training” (Horowitz et al., 2007). Bies and Zacharia (2007) also stated that
13
many of the doctors who practice in medical facilities abroad have trained in developed countries
such as the United States. This suggests that the physicians providing care abroad are wellqualified individuals, adhering to a standard of care equivalent to that is equivalent to that in
developed countries. However, this may not be as evident to a first-time medical tourist unless
they are given this information through their healthcare resources or understand the meaning of
international accreditation. In the case that an individual is considering medical tourism after
being encouraged by their primary care provider or insurance company, there should be
resources available for these potential medical tourists to gauge the quality of care at the
destinations they are considering. It is evident that the quality of care in developed countries is
not necessarily subpar compared to the quality of care in developed countries. As physicians in
medical tourism destinations “have been trained in prestigious medical institutions and hospitals
in the US, Europe and Australia,” patients considering medical tourism can have increased
confidence in the quality of the treatments made available (Britnell, 2011).
4.3
CONTRACT THEORY IN MEDICAL TOURISM
Alongside accreditation, medical tourist agents serve as a useful resource for medical
tourists in selecting healthcare providers at international locations. Medical tourist agents are
healthcare professionals that first-time medical tourists consult with as they begin their search for
an able international healthcare provider. These agents are expected to guide potential medical
tourists throughout their search process for an exceptional healthcare provider overseas. As
medical tourism prompts concerns about the risk of complications resulting from the traveling
involved, it is imperative that patients are educated about all aspects of their healthcare delivery
14
(Horowitz et al., 2007). As medical tourist agents are more knowledgeable than patients, they
aid in the decision-making process by helping patients make more informed decisions.
However, medical tourists are a part of medical tourism agencies that partner with a number of
healthcare organizations abroad to recruit patients, which raises the question about bias. While a
potential medical tourist has options within the member organizations of the agency, they are
limited to the international facilities the agent is familiar with and can encourage patient to use
these providers only (International Medical Travel, 2015). In addition, some medical tourist
agents can also encourage patients for their own financial benefits, as some are paid on a
commission basis through the medical clinics, hotels and airlines (Senior, 2013). While medical
tourist agents can benefit patients interested in medical tourism, potential medical tourists should
investigate the agency they are considering to ensure they are committed to serving the medical
needs of their customers.
4.3.1 Information Asymmetries
Information asymmetries exist between provider and patients in the healthcare industry.
As providers are more knowledgeable about procedures and healthcare delivery, “the doctor has
relevant information that the patient lacks” (Shmanske, 1996). It is known that “buyers and
sellers cannot trade efficiently if one side of the transaction can be manipulated or charged
excessively because of inferior information” (Shmanske, 1996). However, in medical tourism,
patients usually take initiative and use their resources in the healthcare industry to learn more
(Horowitz et. al, 2007). This suggests that medical tourism can reduce information asymmetries,
as patients become medical tourists and involve a physician, medical tourist agent or insurance
company to guide them along the way. The final decision about where to seek treatment is all
15
dependent on the information patients receive and whether or not they believe their preferred
method of treatment is better served at an international location. However, despite medical
tourism’s ability to bring information together, it is still a healthcare transaction in which the
agency theory also applies.
4.3.2 The Agency Theory
In medical tourism, the agency theory applies where the patient and medical tourist agent
serve as the principal and agent, respectively. In healthcare, it is known that “the agent has
different motivations, desires, and information than the principal and, as a result, will not carry
out the task exactly as the principal wishes” (Shmanske, 1996). This suggests that an imbalance
of power in decision-making exists and the principal can experience disappoint and abuse in their
healthcare delivery decisions. However, first-time medical tourists can avoid this by also using
available resources outside of their healthcare providers, such as the Internet, accreditation
boards, health insurance companies, recent medical tourists and other third parties. By using all
available resources, a potential medical tourist can make their own informed decisions and have
an effective medical tourism experience.
4.4
ADOPTING TECHNOLOGY AND NEW INNOVATIONS
In line with the issue of properly assessing the quality of care at medical tourism
destinations is the issue surrounding how efficient international medical facilities are with
adopting new technologies in medical sciences.
16
However, studies show that “technology,
competency and the availability of treatment options that may not exist at home are luring many
medical travelers to medical tourism destinations” (Britnell, 2011). This suggests that some
medical tourists’ destinations are leading in innovation and technology. Britnell (2011) reports
that “leading physicians are also returning home with global expertise and establishing worldclass medical facilities” in developing countries. In many cases, developing countries make
extensive efforts to upgrade their technology and adopt western protocols in order to continue
providing state-of-the-art medicine (Smith et al., 2011). It is evident that medical tourism
destinations make the necessary efforts to keep up with advancements in technology to benefit
their patients and continue gaining prestige, and market share, in the medical tourism industry.
17
5.0
OUTSOURCING SURGICAL PROCEDURES
As mentioned, the burden of cost is a major driver of medical tourism. Medical tourism
can save the consumer up to 87% of the costs they would spend for elective surgical procedures
in their domestic location (Britnell, 2011). With such advantages, studies show that medical
tourism is frequently used for expensive surgical procedures. In addition, as medical tourists
learn more about their international options, they become more knowledgeable of the other
advantages of engaging in medical tourism including reduced wait times and equivalent care
(Sheppard, Lester, Karmali, de Gara, & Birch, 2014).
5.1
COST-SAVINGS IN MEDICAL TOURISM
As surgical procedures are usually more expensive in developed countries, medical
tourists look to travel abroad to receive treatment and lessen their financial burden. As depicted
in Table 3, some of the most expensive procedures in America are up to $1,000 to $164,500
more expensive than those in popular medical tourist destinations (Waiker, Cappel & Tate,
2011). As developing countries offer cheaper rates with equivalent levels of quality care,
individuals from first world countries seek procedures offshore to meet their needs and decrease
the associated financial demands. In assessing why the cost of medical care is cheaper in
developing countries, research suggests that average cost of care in international medical
18
facilities is lower because of the nation’s economic status (Horowitz et al, 2007). This suggests
that medical tourists will continue to pay less for medical care as long as their destination’s
economy is in the development stage.
However, as these countries continue to develop
themselves, cost of care will likely be a great focus, as international locations will either choose
to inflate their prices or keep them stagnant (Horowitz et al, 2007). .
Table 2. Cost Comparisons of Surgical Procedures
Waiker, A., Cappel, S. D., & Tate, U. S. (2011). Challenges and Opportunities for Developing Countries from Medical Tourism.
Journal of Business and Economics, 2(5), 397-404. Retrieved from mds.marshall.edu/mgmt_faculty/13/
19
6.0
THE INSURANCE INDUSTRY
While cost is a prime factor for why patients engage in medical tourism, insurance also
plays a role in prompting patients to become medical tourists. Studies show that insured
individuals in developed countries still travel overseas for the delivery of healthcare services
despite their coverage through employer-sponsored health insurance programs for certain
medical procedures uncovered by their insurance plan (Horowitz et al., 2007). The recognition
of medical tourism as an option for medical care has influenced how insurance industries suggest
options for their beneficiaries. As medical tourism has become more popular, “the insurance
industry has become an active participant in medical tourism” (Horowitz et al., 2007).
In parts of the United States, “Blue Cross Blue Shield sells insurance policies that enable
or encourage patients to have expensive surgical procedures at low-cost offshore medical
facilities” (Horowitz et al., 2007). In addition, insurance provider networks across the United
States are starting to expand their in-network providers to those overseas (Horowitz et al., 2007).
. This collaboration proves that insurance companies believe their consumers can benefit from
medical tourism and will still receive high quality healthcare despite price differences. Medical
tourism also benefits insurance companies as the cost associated with providing medical tourism
insurance policies to their beneficiaries allows them to save money. In addition, they are able to
pass some of these savings on to their beneficiaries. Horowitz (2007) reports that “insurance
companies are able to use a portion of their substantial savings to offer incentives to beneficiaries
20
willing to have care in medical tourism destinations, including waiving deductible and out-ofpocket health expenses and paying for travel for the patient and even a family member.” Such
provisions allow more incentives for patients to engage in medical tourism when in need of a
complex and expensive surgical procedure. In developed countries, such as the United States,
insurance companies encouraging their beneficiaries to engage in medical tourism can,
potentially, influence the rate of healthcare inflation and positively impact the nation’s GDP.
21
7.0
MEDICAL TOURISM AND THE FUTURE OF THE HEALTHCARE MARKET
Medical tourism allows for increased globalization of the healthcare market and “with
increasing globalization, many countries are considering opening their health systems to greater
cross-border movement of patients” (Smith et al., 2011). This presents the opportunity for
nations to join together in bi-lateral trade, where healthcare organizations in different parts of the
world work together to coordinate the full scope of medical care for medical tourists. Bi-lateral
relationships could benefit patients, as post-operative care is the responsibility of both the
international provider and domestic provider once a medical tourist returns home. However,
while the benefits of a fully integrated global healthcare market have been recognized, there have
been no formal establishments of such a relationship.
Instead, countries have unofficial
arrangements, as seen with the United States and Bermuda. Bermuda allows institutionalized
exits where “governments and payers have established formal programs or policies to regulate
patient mobility” (Laugesen & Vargas-Bustamente, 2010). In this program, the public hospital
“arranges for some patients who need specialized emergency trauma care, heart surgery, and
some cancer treatments to travel to specialty care centers in Boston, New York, and Baltimore”
(Laugesen & Vargas-Bustamente, 2010). While this example reflects the traditional direction of
medical tourism, increased recognition of the alternative direction of medical tourism is
increasing globalization, causing many countries to consider opening their health systems to
greater cross border patient movement (Smith et al., 2011). Smith et al. (2011) suggests that if
22
countries participating in medical tourism worked together with the domestic medical facility of
a patient to coordinate care, there is potential for an increase in patient choice, privacy and
confidentiality as well as an increase in quality and personal care. Such occurrences could
increase the globalization of the healthcare market beyond what has been seen in the 21st century.
7.1
GLOBALIZATION OF THE MARKET
“In a bi-lateral relationship, it would be easier to plan which patients were sent where for
what care, and address quality issues” (Smith et al., 2011). This integration can increase system
quality and allow for efficient usage of healthcare resources, increased collaboration in
healthcare delivery and the idea of portable coverage (Laugesen & Vargas-Bustamente, 2010).
The trends between the UK and India reflect a bi-lateral relationship though there is no formal
link established. In this relationship, India promotes medical tourism and medical tourism
agencies arrange packages for 20-40 Britons to receive healthcare in India each month (Smith et
al., 2011). These packages are usually formed through partnerships between private health
insurance companies in the UK and the medical facilities in India. India is able to see continued
success in the medical tourism industry with their efforts to upgrade technology and adopt
Western protocols while the UK benefits both financially and socially from sending their patients
to India (Smith et al., 2011). While a contractual framework of a bi-lateral relationship does not
exist on paper between the two countries, both countries appear to benefit from the UK sending
their citizens to India for healthcare. Furthermore, there are implications for quality assurance,
litigation and post-operative care as seen in Table 3. In this table, the terms and dynamics of a
bi-lateral and multi-lateral trade agreement are described. Smith et al. (2011) suggests that a bi23
lateral relationship is controlled through a contractual agreement, which specifies the exchanges
and arrangements between the two entities to limit issues. A multi-lateral relationship appears
more vague and control of the issues with exchanges and arrangements are not clearly stated
(Smith et al., 2011).
Table 3. Differences between bi-lateral trade and multi-lateral trade agreements
Smith, R., Alvarez, M. M., & Chanda, R. (2011). Medical tourism: A review of the
literature and analysis of a role for bi-lateral trade. Health Policy, 103 (2-3), 276
282. Retrieved from www.sciencedirect.com/science/article/pii/S0168851011001199
Bi-lateral or multi-lateral trade not only has positive implications for the delivery of
healthcare services but also has financial implications for the broader healthcare market.
Mergers and collaborations would allow for healthcare organizations involved to “grab the
maximum share of the rapidly growing medical tourism market” (Britnell, 2011). An increase in
market share would increase the volume of medical tourists for healthcare organizations involved
24
and vary their case-mix. In addition, healthcare organizations are likely to share information and
quality improvement processes in surgical procedures if they are involved in bi-lateral trade with
other organizations. The offshore destination has potential to see an increase in revenue from a
high growth in volume while the domestic location can see potential savings from sending
patients abroad (Smith et. al, 2011). Regarding financial implications, “one study estimates that
if one in ten US patients suffering from 1 of 15 conditions went abroad for medical treatment, the
overall savings would be of $1.4 billion annually” (Smith et al., 2011). While the developed
country would see a decrease in health expenditures, the developing country would see an
increase in revenue, positively impacting both nations’ economic status.
Figure 2 depicts
projected revenue from medical tourism in Thailand as a function of increased volume. The
NaRanong, A., & NaRanong, V. (2011). The effects of medical tourism: Thailand’s Experience. World Health
Organizations, 89, 336-344. Retrieved from http://www.who.int/bulletin/volumes/89/5/09-072249/en/
Figure 2. Trends in Revenue from Medical Tourists in Thailand, 2006-2012
25
figure shows that developing countries are expected to benefit financially through medical
tourism (NaRong & NaRong, 2011).
7.2
COORDINATION OF CARE
Lastly, globalization of the healthcare market can increase care coordination of patients
that engage in medical tourism. Runnels and Carrera (2012) report that “the process of engaging
in medical tourism does not end with the provision of healthcare abroad considering that full
recuperation takes place back at home even though initial recover happens within and/or outside
the health facility abroad.”
The follow-up required after surgical procedures puts the
responsibility for care on the local healthcare provider.
While a medical tourist’s local
healthcare provider would directly manage a patient’s adverse outcomes resulting from medical
tourism, interaction with the international facility would be necessary in efforts to provide
effective quality healthcare. This suggests that “medical tourism is not just an issue of the
individual patient but of the healthcare system as a whole”, further positioning medical tourism
as a means to globalize the healthcare market (Horowitz et al., 2007).
26
8.0
CONCLUSION
As the cost of healthcare continues to increase in developed countries, the phenomenon
known as medical tourism has become more appealing to individuals in these settings as a means
to decrease financial burdens, reduce wait times and access healthcare in the face of inadequate
insurance coverage in their home countries. Patients from the most developed countries around
the world are traveling to the least developed countries to receive medical care for as low as 10%
of the cost of the same treatment in their home country. In addition to the financial incentives
associated with medical tourism, medical tourists see a decrease in wait times for their preferred
method of treatment in comparison to the wait times in developed countries. The financial
benefits and immediacy of care have drawn more attention to medical tourism for individuals
without insurance, individuals with insurance, insurance agencies and healthcare organizations
worldwide. As the advantages of medical tourism gain worldwide recognition, the opportunity
for bi-lateral and multi-lateral trade arises as the globalization of the healthcare market continues
to increase.
The collaborations between healthcare organizations in medical tourism have
implications for the direction of healthcare worldwide and create opportunities for new
innovations and ideas to be shared across borders.
While the primary reason patients from developed countries have medical services
delivered in less developed countries is due to the attraction of low costs, patients should also be
mindful that they are receiving value for their money. Measuring value in medical tourism is
27
directly associated with measuring the quality of care. Accurately measuring quality of care is
an issue in medical tourism, however medical tourists can work with medical tourist agents to
gauge quality of care and determine the right provider for their preferred treatment. By assessing
the accreditation of an international medical facility, a first-time medical tourist can better
determine the quality of the healthcare services at their interested destination. As medical
tourism gains in popularity, more international medical facilities will seek accreditation from the
Joint Commission International or a similar accreditation board to maintain momentum in the
industry. This is expected to provide more resources for patients engaging in medical tourism as
they seek ways to determine the quality of care overseas.
It is evident that medical tourism can function as an integral part of the healthcare system,
both on a national and on a global level. The cost of healthcare to the individual and to the
exporting country could see significant declines as more patients shift towards outsourcing their
healthcare services. In addition to this, importing countries have the opportunity to see an
increase in revenue as the volume of their medical tourists increase. While medical tourism has
its benefits on both the micro and macro scales of the healthcare market, there are also risks
associated that potential medical tourists should recognize. As the tradeoff in medical tourism is
a decrease in cost for an increase in risk, medical tourists need to be well educated and conduct
the proper research to ensure an effective experience. Further investigation into medical tourism
should be conducted to give interested individuals and their domestic insurance and healthcare
providers more information as to whether or not medical tourism should be encouraged. As the
phenomenon of medical tourism continues to expand, developed and developing countries
should work together in bi-lateral or multi-lateral trade to expand the globalization of healthcare
to improve the efficiency, impact and cost of delivering healthcare.
28
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