Leadership
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Converging Global Factors Vex Forecasters

Rick Johnson, for HealthLeaders Media, January 20, 2009

One thing is certain, healthcare globalization by its broadest definition is already well under way. Nearly every day a new, cross-border deal makes headlines. In the latest development WellPoint is providing medical management consulting services in China through WPMI Enterprise Consulting and Services Co.

As healthcare organizations expand across the globe, opportunities abound for private hospitals, consultants, medical device firms, and associations. But perhaps the most publicized element from a Western perspective has been the predictions that outbound medical travel will dig into U.S. providers' margins.

For this month's issue of HealthLeaders magazine, I wrote a cover story called Flat-World Healthcare that takes a deep-dive look into how emerging global competitors could impact U.S. providers.

Even though researchers are paying greater attention to the globalization of healthcare than ever before, recent speculation about the rate and reach of medical travel is running up against today's uncertain economic conditions.

On one hand, some of the economic fundamentals appear to be lining up in support of an increase in employer-sponsored medical travel benefits. In a down economy, U.S. employers are saying they cannot keep up with the cost of healthcare, and paying an average of $8,482 per worker for health coverage puts them at a competitive disadvantage globally. For the first time ever, American workers in 2008 on average paid more than $1,000 for employer-sponsored insurance coverage, according to benefits consulting firm Mercer, which is up 17% from $859 in 2007.

What's more, the high-deductible, consumer-directed insurance trend is only expected to escalate in the coming years. Employers want workers to pick up more of the healthcare tab so that they will make smarter and more cost-effective health choices, and as they shift more of the financial burden onto workers, some employers are also trying to give them cost-saving options to make their healthcare dollars go further. With large companies and payers watching intently, a handful of employers have entered into deals with international hospitals to offer medical travel benefits as part of their self-insured plans.

"Employers are asking for innovative solutions around reducing their overall healthcare spend," Vishal Bali, CEO of Wockhardt Hospitals Group, tells me in this month's issue. "Hospitals in the United States are not going to be able to change their cost structures. Then what are the other options? Looking at our global options for reducing healthcare costs."

For sure, not everyone is convinced that droves of insured Americans will flee to private hospitals abroad. But considering the financial outlook of the healthcare system, and the fact that global competitors are focusing on traditionally high-dollar elective procedures, it may not take millions of patients to hurt U.S. healthcare's bottom line. At the end of last year, Moody's Investor Services downgraded the healthcare industry's 12- to 18-month outlook from stable to negative. Moody's predicts that in a tough economy, fewer paying patients will seek care, particularly in costly elective surgeries. In fact, the American Hospital Association released data supporting this outlook. The AHA says admissions and elective procedures are both down across the nation.

But at the same time remember that we are in the midst of a global recession, so these trends are not solely impacting U.S. providers. For sure, private healthcare organizations abroad are running against the same consumer mentality. Regardless of geographic location, when people face financial insecurity, even necessary elective procedures become luxury items. Added to the weak economic outlook are recent stories of terrorism and other security issues affecting medical travel destinations like India, Thailand, and Mexico, and predicting globalization's near-term impact on healthcare is a muddy forecast at best.


Rick Johnson is senior online editor of HealthLeaders Media. He may be reached at rjohnson@healthleadersmedia.com.
View Rick Johnson's LinkedIn profileView Rick Johnson's profile


Note: You can sign up to receive HealthLeaders Media Global, a free weekly e-newsletter that provides strategic information on the business of healthcare management from around the globe.

Comments are moderated. Please be patient.