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Medical Travel: The Empire Strikes Back

Rick Johnson, for HealthLeaders Media, September 16, 2008

Here's a medical travel story that, in hindsight, was inevitable.

The Wall Street Journal reports that U.S. employers are leveraging the deals they have with global healthcare providers to get substantially lower rates from providers in the States.

Hannaford's Peter Hayes has seen his name in print a lot this year since his company struck a deal that could send the Scarborough, ME, supermarket chain's employees to Singapore for select elective procedures. Now Hayes tells the Journal that U.S. providers are lining up to match that deal, and Hannaford has already put Aetna to work vetting them.

Now one case study hardly makes a trend, but nonetheless this is a development worth following. If that report from earlier this year by the Deloitte Center for Health Solutions that says American providers stand to lose billions of dollars in outbound medical travel is even close to reality, did you think the U.S. healthcare system would just sit back and watch as Americans get their knees, hips, spines, and hearts worked on overseas?

Nope. There are plenty of healthcare entrepreneurs in America who are more than happy to take half the pie over nothing at all. Plus, there are some out there that don't mind the idea of cutting out insurers to negotiate directly with self-insured employers, like Hannaford Bros.

Mike Taylor, a principal at Towers Perrin, says much that has been written about medical travel is hype over reality, but he expects that we might begin to see some U.S. providers react to the threat of outbound medical travel.

"It's the old bluffing game we've had with managed care," says Taylor. "If I hold out the threat that I'll send my employees overseas, you have to react to that."

Still, reports from Deloitte, McKinsey, and others point to the 45 million-plus Americans that are uninsured and underinsured as the best growth opportunity for medical travel. True enough that awareness of medical travel is on the rise, but one company is trying to turn the medical travel model on its head.

Healthplace America is working to build a network of U.S. providers as an alternative to outbound medical travel. Darren Tomey, executive vice president of sales and marketing, says employers and employees can save 30% to 50% on select elective procedures without the barriers of extended travel, passports, and medical liability issues.

Right now Healthplace America is focused on offering value-based health benefits to self-insured employers, but once it has developed a provider network and price structures, what's stopping the firm from becoming an in-country facilitator for the uninsured?

Nothing. And if Healthplace America doesn't do it, someone else will. "Our biggest emphasis is on the self-insured market," says Tomey, but he also acknowledges that working with uninsured individuals is a "wide-open opportunity" that his firm is exploring.

On Physician Leadership

I will be facilitating a C-suite peer panel at this year's Top Leadership Teams in Healthcare conference called "New Medical Staff Models for Strategic Growth." In the conversations I've had with the panelists—including Edward Murphy, MD, president and CEO of Carilion Clinic; Kelby Krabbenhoft, president and CEO of Sanford Health; and James Leonard, MD, president and CEO of Carle Foundation Hospital—I expect this will be a lively discussion that covers many of today's hot issues between hospital executives and physician leaders. Visit topleadershipteams.net to find out more about this year's program, which will be held at the Drake Hotel in Chicago, Oct. 16-17, 2008.


Rick Johnson is senior online editor of HealthLeaders Media. He may be reached at rjohnson@healthleadersmedia.com.
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