Medical Tourism: Comparing Coronary Bypass Surgery in the U.S. and Abroad

Rising health care costs have employers searching for remedies to the increasing rates they pay for employee health insurance. The development of U.S. health insurance policies, with the option of utilizing medical tourism as a low cost care provider for treatment of cardiac coronary bypass surgery provides a method for receiving treatment. The medical tourism approach to providing treatment for bypass surgery has prompted hospitals in India, Thailand, and Singapore to seek U.S. patients. A comparison of costs for bypass treatment between the U.S. and these countries illustrates some of the issues and concerns that arise when making such comparisons. The overall approach of medical tourism by U.S. employers is one of ‘wait and see. ” ______________________________________________________________________________________ _______ INTRODUCTION Rising health care costs within the U.S. places economic strain on employers, employees, and private insurance paying individuals. An increase in health care expenditures for all parties involved often creates a need for these parties to seek alternative measures and destinations to receive and pay for health care (Woodman, 2010; Alleman, et al. 2011; Underwood and Makadon 2010). In recent years, interest in “medical tourism” demonstrates an increase, not only in the U.S., but also in other countries, in part due to escalating health care costs and other health related issues, which are country specific. Medical tourism has generated a growth in new U.S. businesses in the form of medical facilitators (Synder, et al. 2011; Medical Tourism Association 2013; Deloitte Center 2008) and some larger U.S hospitals (Deloitte Center 2008; Smerd 2008) and health insurers (Mitchell 2013) are beginning to establish agreements with several larger hospitals abroad. Some of the larger hospitals in India, Thailand, and Singapore directly market services globally allowing medical tourists to negotiate their own medical care with the hospital (Alleman et al 2011; Turner 2010a). Business and Health Administration Association Annual Conference 2014 Page 208 Medical tourism is becoming a source of economic gain for many countries and regions of the world. (Carruth and Carruth 2010; Hill n.d.; Kahn 2010) Medical tourism increases the economic situation (Munro 2012; Pocock and Phua 2011) in a destination country, provides care for many individuals willing to pay out of pocket, and lowers health insurance costs for U.S. employers and health insurers willing to pay for health care abroad. It is difficult to determine, with any accuracy, the number of persons travelling from the U.S alone to a foreign country for health care reasons. Estimates of Americans travelling abroad for treatments place the number of persons traveling to India or Thailand for health care reasons in excess of 750,000 persons for 2005 (Herrick 2007; Kahn 2010). A 2003 estimate placed the total number of persons traveling to India, Thailand, Singapore, and Malaysia at 1.4 million persons (Heung, Kucukusta, and Song 2011). This estimate increased in 2010 to 6 million persons, with an economic gain of > $4 billion, with half of the revenue going to India (Heung, Kucukusta, and Song 2011; Horowitz, Rosensweig, and Jones 2007; Hill n.d.). As medical tourism develops into a multi-billion dollar industry, with steady annual growth projected, estimates of global economic gains vary between $40 and $100 billion for destination countries (Zwelling 2011; Herrick 2007). While the increase of health care treatments and procedures performed abroad involves many elective procedures (Woodman 2010; Synder, Dharamsi and Crooks 2011, Milstein and Smith 2007), which many U.S. health insurers deny payment, there is a growing interest by U.S. health care insurers to pay for more expensive complex procedures, such as Coronary Arterial Bypass Graft (CABG) surgery. Coronary bypass surgery, one of the most common cardiac surgical procedures performed, serves as a “cash cow” for many U.S. hospitals (Crowley 2010). Because cardiac surgery procedures provide high revenue, smaller local hospitals can market as offering a high-profile program in cardiac care even if the hospital has a low volume of bypass cases, thereby increasing patient volume and revenue (Regenbogen, Gust, Birkmeyer 2012). Focusing on coronary bypass, a review of Medicare data (1992 – 2003) demonstrates a decline in coronary bypass surgical procedures from 1992 to 2003, while the number of hospitals performing these surgeries steadily increased (Wilson, et al. 2007). Using Nationwide Inpatient Sample data (2001 – 2008), a study by Epstein et al (2011) supports Wilson’s et al review, demonstrating a decrease in the number of coronary bypass surgeries per hospital, yet a 12% increase in the number of hospitals during this period. In an effort to lure Americans to seek care abroad, coronary bypass procedures have become one of several expensive health care procedures offered by larger health care facilities in India, Singapore, and Thailand. This paper focuses on examining the growing interest of U.S. individuals, employers, and health insurance providers for having coronary bypass performed in India, Thailand, or Singapore. Cost comparison of coronary bypass Costs of coronary bypass surgery is cited by more U.S. individuals and companies providing employee health insurance as being the single most important factor of consideration for seeking coronary bypass surgery abroad. Table 1 illustrates the cost comparison of coronary bypass surgery in the U.S. with India, Thailand, and Singapore; these cost comparison figures are promoted throughout the medical tourism industry. A comparison study of costs for coronary bypass surgery in two large hospitals in India, one in Thailand, and the overall California Insurer average cost payment, demonstrates the costs in India and Thailand did not exceed $15,000 while the California Insurer average (private insurance) exceeded $50,000 (Milstein and Smith 2007) Table 1. Cost Comparison of Coronary Bypass Surgery (U.S. $) Procedure U.S Insurers Cost U.S. Retail Cost India Thailand Singapore Business and Health Administration Association Annual Conference 2014 Page 209 Heart Bypass 54,741 – 79,071(94,277) 122,424 – 176,835 (210,842) 10,000 12,000 20,000 Source: Kher. , 2006 Outsourcing your heart. TIME and Herrick 2007. Essentially the difference between comparing costs yielding a small or large cost savings result actually reflect the differences in the reference standard used to estimate costs rather than any true difference in the estimated costs of overseas health procedures. Alleman et al (2010) research, based costs comparisons estimates on Medicare data, which demonstrated a smaller than expected cost savings. Milstein and Smith’s (2007) research, demonstrated a higher costs saving, which resulted from using data for comparison based on private insurer payments in California. Making direct comparisons of costs for coronary bypass procedures between the U.S. and overseas health care facilities is in part somewhat unreasonable due to the presence of factors contributing to the lower costs overseas. Various reasons do exist enabling India, Thailand, or Singapore to offer low costs for bypass surgery, some of which include, lower physician’s earnings, lower labor costs, virtually nonexistent third party involvement, one stop package pricing, limited collaborations between health care facilities, and low malpractice litigations (Herrick 2007; Gill and Singh 2011; Unti 2009; Gan and Fredrick 2011). While a direct comparison of costs is somewhat unreasonable, it is reasonable to question how the U.S. health care system and providers can bring the costs of coronary bypass surgery and other costly treatments and procedures more in line with overseas hospital costs. A study of 633 U.S. hospitals, which perform coronary bypass surgery, found the variability in hospital specific costs was one of the major contributors to higher costs for coronary bypass surgeries. Quality of care from different hospitals may be relatively the same, yet the pathway for achieving that care may be quite different from hospital to hospital thus creating more costs in some procedures and less cost in others (Kilic et al 2014). Examining such factors as these costs variations may lead to lower U.S. costs for coronary bypass. However, if true cost containment by the American health care system is not established, medical tourism may have more impact upon the system. Focusing on cost containment alone makes medical tourism appear as a way of escaping the true cost problem of the U.S. health care system. Insurers and employer perspective Some U.S. private health insurance providers and employers providing health care insurance to employees display an interest in medical tourism as a cost reduction measure. Health care treatments and procedures for major surgeries such as coronary bypass are expensive. The expense affects employer’s costs of providing employee health insurance and employee’s costs of paying the premiums in obtaining health care insurance and associated deductibles (Miller 2013; National Conference of State Legislatures 2013). Rising health care insurance costs are dipping deeper into the pockets of employers and workers. Employer-sponsored health insurance is the largest source of coverage in the U.S., covering in excess of 149 million (2013 estimates) nonelderly persons. This coverage, expected to continue after implementation of the Affordable Care Act (ACA) in 2014, will undergo changes as ACA regulations take effect. Both single and family plan employer sponsored insurance benefits have seen increases in deductibles with higher deductible plans offered, more out of pocket costs, employee contributions towards premiums, and decreases in coverage for certain procedures (Bodenheimer 2005; Claxton, et al. 2010; Claxton, et al. 2013). Business and Health Administration Associa