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Red Ink Flows While Facilitators Make Inroads

Rick Johnson, for HealthLeaders Media, March 3, 2009

The LA Times reported yesterday that U.S. hospitals are bleeding red ink. Half of them are running losses, forcing them to cut services and staff. For sure this is not just a problem for U.S. hospitals.

The global recession—at what point can we start calling it a depression?—has hammered every organization's investments, and elective procedures aren't just down in Florida; private hospitals around the globe are performing fewer elective surgeries.

Even as U.S. hospitals try to stop the bleeding, there's a sense that things are going to get worse before they improve. At the same time, private global hospitals and medical travel facilitators are sticking to a game plan they drew up before any of us saw that the economic crisis was coming.

Last week, I told you about Companion Global expanding its network into Mexico. This week, a new medical travel company called Satori World Medical announced a deal with a California-based employee benefits firm. The agreement lets McGregor & Associates, a benefits consulting firm that specializes in public sector employers, offer its clients Satori's global network of providers for select elective procedures.

I just received a written statement about the deal from Satori last night, but the prepared quote attributed to George McGregor, president of McGregor & Associates, hit on some of the major themes employer groups have been complaining about even before the economy tanked: "The costs of healthcare in the U.S. are higher than in any other country in the world, placing an enormous burden on today's U.S. companies that fund their employees' healthcare, in addition to the employees themselves who have become responsible for more and more of their own medical expenses."

Nowadays, elective procedures are going to be a hard sell for just about every healthcare organization, and I'm hardly convinced that for U.S.-based healthcare executives trying to keep hospital margins afloat that the medical travel threat is the top concern right now. 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.

As Mike Taylor, a principal at Towers Perrin in Boston, told me when I was working on a recent cover story on medical travel, community hospital administrators would get nervous if global competitors were someday able to siphon 10% of select elective surgeries. "Those are the procedures that make the difference as to whether the hospital is in the red or in the black," he said.

Indeed, and more and more hospitals are not able to get the electives needed to make up the difference.


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