Have Plane, Will Travel for Lower Cost Health Care

 
Steven Lash is CEO of Satori World Medical, which helps companies reduce their health care costs. | Photo by Stephen Whalen
Just four days before surgery to alleviate chronic back pain, 36-year-old Sacramento insurance agent Wayne King found out his health care insurer was no longer willing to cover the procedure.

The insurer deemed his two-level total disc replacement surgery experimental, a representative said.

King was devastated to find that it would cost him $105,000, including $52,000 upfront, to undergo the procedure at a nearby hospital.

After mulling his options, including bankruptcy, King had the procedure done in Malaysia, where just two weeks later he was relaxing at a seaside resort and taking in the lush scenery with his family. The cost: $28,000, including his hospital expenses and airfare and hotel for three people.

King is among hundreds of thousands of Americans who have sought medical treatment outside the United States at a fraction of the cost charged by domestic health care providers. An offshoot of tourism, known as medical tourism, has formed to accommodate them. Broadly speaking, medical tourism refers to traveling to another country for health care.

For King, Malaysia offered the opportunity to access low-cost health care without restrictions placed on him by his insurer. Today, King says he’s pain-free.

“I wasn’t able to stand for more than 20 minutes prior to the surgery without being in pain,” King said. “I really have my life back.”
While cosmetic surgeries and dental work have commonly drawn Americans to Mexico, many today also travel to places such as India, Malaysia, the Philippines and Thailand for hip and knee replacements, dental implants, coronary angioplasties, spinal fusions and ovarian cyst removals.

Boom Expected

In the next three to five years, the industry is expected to boom, according to the Deloitte 2008 Survey of Health Care Consumers. Last year, Americans seeking treatment outside the U.S. produced $2.1 billion in revenues for the industry, and that number is projected to reach $4.4 billion this year. The study predicted that by 2010, 6 million people will go outside of the U.S. for health care.

San Diego’s proximity to the Mexican border has made it an ideal hub for businesses interested in establishing a presence in the growing industry. Many of those businesses are seeking to connect people without health insurance — or those who recently lost coverage — to a network of foreign doctors and hospital groups.

Steven Lash, CEO of San Diego-based Satori World Medical, identified another need among consumers: employees with health insurance seeking low-cost treatment options.

“Right now, we’re seeing a lot of interest in cardio and orthopedic procedures,” Lash said. “It’s the expensive procedures because that’s where companies get the leverage of savings in the U.S. versus out-of-country.”

Satori works with consumer-driven health reimbursement accounts funded by employers. The tax-exempt accounts, which allow employees to receive reimbursement for medical expenses not covered under the business’ standard plan, can offer Satori’s program as an option.

Employers share a percentage or fixed dollar amount of the savings with the employee by funding the account with the Satori option. Employees, on the other hand, pay nothing out of pocket if they select a Satori network provider for their care.

Many health plans put limits on cosmetic procedures, and it is up to the individuals to find out what their provider is willing to cover.

While Satori’s program is still in its infancy, it has attracted interest from large public entities, such as public school districts, seeking to reduce their health care costs in an economy that has put a sizable dent in their operating budgets, according to Lash.

Satori recently signed up employee benefits administrator McGregor & Associates, a Kentucky-based firm specializing in public sector employees.

Potential Cost Savings

Besides large public entities, individuals are also taking note of the potential cost savings involved in overseas medical travel. A separate study commissioned by Deloitte this year shows that 43 percent of respondents say they would be likely to travel out of their local area to undergo a test, procedure or treatment if they could save 50 percent or more.

Patrick Marsek, co-founder of medical tourism agency MedRetreat and author of a newly released book, “The Complete Idiot’s Guide to Medical Tourism,” says he’s noticed a shift in consumer attitude toward foreign health care in the past couple of years. As the economy has worsened, more people are contemplating medical travel to take advantage of the cost savings.

While hip replacements can cost $65,000 in the United States, travel and treatment cost as little as $15,000 in Mexico, he says.

“You’re saving anywhere between $25,000 and $50,000 and that’s at least something people look at,” Marsek said. “They may not have $50,000, but at least they can scrape up $15,000.”

While consumers consider their options, businesses are starting to help streamline their experience abroad. Although many of Mexico’s private hospital systems already have international patient divisions in place, some have trouble managing all the information, says Herb Stephens, CEO of Health Travel Guides based in San Francisco with operations in San Diego.

Stephens, a Silicon Valley software entrepreneur, helped form a division of the business called Health Travel Technologies to offer information technology solutions to foreign health care providers.

“It’s basically outsourcing the IT and operations to us,” he said.