Threat of competition from overseas hospitals can motivate healthcare providers in US to be more innovative

An article recently appeared in DARK Daily, who provide ibusiness and management intelligence to laboratory managers, pathologists and diagnostic executives brings out the opportunities that the healthcare reform has created for the medical tourism in the United States. Experts have weighed in recently on how efforts to reform healthcare may either inhibit or encourage growth in the number of Americans opting to become medical tourists. During the past 24 months, several hospitals in the United States have begun to compete for this medical tourism business. By offering to do surgeries and other procedures during times of the week when facilities are underutilized (like on Fridays and weekends), they have managed to create competitively-priced packages that they offer to those U.S. employers that incorporate a medical tourism option in their health benefits packages.

Just as medical tourism has the potential to be transformative to certain aspects of healthcare in US, Dark Daily believes that medical tourism may also encourage greater globalization of pathology services and clinical laboratory testing. For both reasons, pathologists and clinical laboratory managers will find recent commentary to be enlightening.

Paul Mango, the Head of healthcare consultancy at McKinsey & Co says that, whatever form that healthcare reform takes in the United States, the resulting model of universal healthcare will not be detrimental to medical tourism. Even if, post-reform, the cost of care came under control or actually declined, Mango notes that the addition of large numbers of newly-insured patients into the U.S. healthcare system would increase demand in a healthcare system that currently has little excess capacity, he said.

Some Americans will opt for medical tourism because,  with only so many hospital beds to fill, waiting lists in this country would grow. That would force some patients to look overseas for healthcare even as hospitals here scrambled to accommodate an overwhelming workload and potentially decreased profits. “One of the biggest myths about healthcare reform is that because you’ll have access to health insurance, you’ll have access to care,” Mango stated publicly. “They [these patients] can say, ‘I’m tired of waiting. I’m just going to pay out of pocket and go to Thailand.”

Recent figures says that the number of Americans who traveled overseas as medical tourists have ranged as high as 500,000 people annually. But Mango and his colleagues at McKinsey believe the actual number is much lower. In a May 2008 study conducted by consultants at McKinsey & Co between 5,000 and 10,000 Americans seek healthcare outside the country each year. The statistics are based on five years of researching patient admission records from healthcare providers at the top 20 medical tourism destinations worldwide. By studying this data, Mango was able to make an interesting observation about what motivates Americans to travel abroad for healthcare.

During an interview with Modern Healthcare, Mango said that “Many of the patients were uninsured, and if you’re paying out-of pocket, you can pay almost four to six times less for surgeries in certain markets.” One example McKinsey supplied is that of an aortic valve replacement. In the United States, that procedure would cost $100,000. By contrast, it would cost about $12,000 at an equally credentialed and high quality hospital in Asia.

Dark Daily observes how the threat of competition from overseas hospitals can motivate healthcare providers in the United States to be more innovative in how to provide high quality services at prices comparable to those offered by the hospitals serving the medical tourist trade. There is always some unused capacity that can be offered, based on marginal cost pricing, at attractive rates.

Source: DARK Daily

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