July 2011 Volume 7 Number 11

Domestic Medical Tourism Gaining Traction

By Samuel S. Choy and Stacey L. Stewart, McKenna Long & Aldridge LLP, Atlanta , GA

AuthorAuthorBefore the healthcare reform law dominated discussions, the practice of traveling internationally to obtain lower cost healthcare services received a great deal of publicity. This concept is sometimes referred to as “medical tourism” or “medical outsourcing.” It now appears that domestic medical tourism is also gaining traction. The practice of domestic medical tourism, like its foreign counterpart, is growing rapidly in the United States. This article focuses on domestic medical tourism, also sometimes referred to as intra-bound medical tourism, domestic medical travel, local medical tourism or travel, or in-country medical tourism or travel.

How Can Employers Benefit From Domestic Medical Tourism?

The big incentive for employers to offer a domestic medical travel option to their employees is cost savings. The cost savings to employers result from their negotiating a single rate, including the costs for specialists and all medical care, upfront.1 Other factors contributing to the cost savings include use of lower cost providers and better outcomes.2 Hospitals seeking out-of-town patients are willing to discount services because they are typically paid before the applicable procedures are performed, which allows them to avoid the arduous task of seeking reimbursement afterward.3 In addition, providers are able to offer discounts to employers based on volume and their lower overhead derived from their geographical location (i.e., lower cost of labor, etc.).

The potential for cost savings is high. For example, employers with self-funded insurance plans can reduce costs by 20 percent to 40 percent on knee replacements and heart bypasses.4 Considering the potential savings, employers also offer financial incentives to their employees in the form of waived or lower deductibles and copayments and travel allowances to induce employees to take advantage of the benefit.5 Although this article focuses on the benefits to employers with self-funded plans, insurers also appear to be embracing the trend.6

One employer at the forefront of domestic medical tourism is Lowe’s Companies, Inc. (Lowe’s). Lowe’s has partnered with The Cleveland Clinic for the purposes of providing cardiac services to its employees who are willing to travel. According to Bob Ihrie, Senior Vice President, Employee Rewards and Services, “this is one of our ways of trying to bend the cost curve.”7 For employees that participate in the program, Lowe’s will reportedly cover all medical deductibles and coinsurance amounts as well as travel and lodging expenses for the patient and a companion plus concierge services to make the arrangements.8

Alpha Coal West is another example of a large employer for whom domestic medical tourism appears to be working in its favor. The company, a division of the nation’s third largest coal mining firm, reports that its medical costs have remained flat since the decision in 2001 to offer domestic medical travel.9 Considering the nationwide rise in healthcare costs year after year, this is quite an accomplishment.

Other benefits of domestic medical tourism that set it apart from foreign medical tourism (which can also net a large cost savings to employers) include the generally shorter travel distance making the concept more attractive and palatable to employer and employees, the access to legal recourse within the United States should complications arise, the lack of any language barriers and the fact that employees may feel more comfortable in their home country. The logistics of returning to the United States in the event of any complications, and the uncertain (and sometimes unavailable) legal protections in foreign jurisdictions are concerns for individuals traveling abroad for medical care.

Is Domestic Medical Tourism the Future of Healthcare?

Considering the benefits described above, medical tourism could, perhaps, be the future of healthcare. For example, there are now companies, such as BridgeHealth Medical, Inc., Healthbase and Surgical Trip10, to serve the growing medical tourism industry. These companies act as ‘middlemen’ by negotiating discounted rates with hospitals which they then extended to their customers for a fee. They offer employers access to ‘high quality’ medical care (typically they only negotiate with hospitals that meet certain quality control criteria) at a significant cost savings. As an example of the growing domestic medical tourism market in particular, BridgeHealth Medical, Inc. indicated that sales have increased by 25 percent since it shifted its attention from the foreign to domestic medial tourism market.11

Still, there may be drawbacks to employers offering domestic medical tourism benefits. Although employees typically have a choice of whether to participate in the program or not, large financial incentives may blur the line between choice and necessity.12 This could lead employees to feel forced into unwanted travel which, in turn, could lead to the host of problems typically associated with disgruntled employees. However, the hope for the future of domestic medical tourism remains that it will improve the quality of care and eventually drive down costs of medical care which is largely viewed as out of control. Only time will tell what is the true future impact of this concept that is gaining increasing traction today.


1

Appleby, Julie, “Latest Destination for Medical Tourism: The U.S.,” Kaiser Health News (July 7, 2010).

 

2 Id.
3

Wojcik, Joanne, “Employers Consider Short-Haul Medical Tourism,” Business Insurance (August 24, 2009).

4 Lapowsky, Issie, “Domestic Medical Tourism, How One Company Is Saving Businesses Big Bucks on Employee Medical Treatments,” Inc. (June 2011).
5

Wojcik, Joanne, “Employers Consider Short-Haul Medical Tourism,” Business Insurance (August 24, 2009).

6

“USA: American Insurers and Employers Back Domestic Tourism,” International Medical Travel Journal (December 6, 2010).

7

Appleby, Julie, “Latest Destination for Medical Tourism: The U.S.,” Kaiser Health News (July 7, 2010).

8

D’Ariano, Chelsea, “Domestic Medical Tourism~ How Lowe’s and the Cleveland Clinic are Changing How and Where Healthcare is Delivered,” Medical Tourism Magazine (May 25, 2010).

9

Id.

10

For more information on these companies see www.bridgehealthmedical.com, www.healthbase.com, www.surgicaltrip.com.

11

Lapowsky, Issie, “Domestic Medical Tourism, How One Company Is Saving Businesses Big Bucks on Employee Medical Treatments,” Inc. (June 2011).

12

Appleby, Julie, “Latest Destination for Medical Tourism: The U.S.,” Kaiser Health News (July 7, 2010).


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