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30–618 PDF 2006

S. HRG. 109–659

THE GLOBALIZATION OF HEALTH CARE:

CAN MEDICAL TOURISM REDUCE HEALTH CARE

COSTS?

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

WASHINGTON, DC

JUNE 27, 2006

Serial No. 109–26

Printed for the use of the Special Committee on Aging

(

SPECIAL COMMITTEE ON AGING 

GORDON SMITH, Oregon, Chairman 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

JAMES M. TALENT, Missouri 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

RICK SANTORUM, Pennsylvania 

CONRAD BURNS, Montana 

LAMAR ALEXANDER, Tennessee 

JIM DEMINT, South Carolina 

HERB KOHL, Wisconsin 

JAMES M. JEFFORDS, Vermont 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

KEN SALAZAR, Colorado 

CATHERINE FINLEY, Staff Director 

JULIE COHEN, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Gordon Smith ....................................................... 1

PANEL I 

Howard Staab and Maggi Ann Grace, patient and patient advocate, Carrboro, 

NC ......................................................................................................................... 2

Arnold Milstein, MD, Mercer Health and Benefits, San Francisco, CA ............. 18

Bonnie Blackley, corporate benefits director, Blue Ridge Paper Products, Canton, NC .................................................................................................................. 26

Rajesh Rao, CEO, IndUShealth, Raleigh, NC ....................................................... 34

Bruce Cunningham, MD, president, American Society of Plastic Surgeons, 

Minneapolis, MN .................................................................................................. 44

APPENDIX 

Prepared Statement of Senator Herb Kohl ........................................................... 55

Prepared Statement of Senator Ken Salazar ........................................................ 55

Statement submitted by the Joint Commission on Accreditation of Healthcare 

Organizations ....................................................................................................... 57

Comments from Rudy Rupak, founder and head concierge, PlanetHospital ...... 63

(III) 

(1)

THE GLOBALIZATION OF HEALTH CARE: CAN 

MEDICAL TOURISM REDUCE HEALTH CARE 

COSTS? 

TUESDAY, JUNE 27, 2006 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC. 

The committee met, pursuant to notice, at 10:05 a.m., in room 

215, Dirksen Senate Office Building, Hon. Gordon H. Smith (chairman of the committee) presiding. 

Present: Senator Smith. 

OPENING STATEMENT OF SENATOR GORDON H. SMITH, 

CHAIRMAN 

The CHAIRMAN. Good morning. We welcome you all, as we convene this U.S. Senate Special Committee on Aging. Our topic today 

is the Globalization of Health Care: Can Medical Tourism Reduce 

Health Care Costs? 

We are glad you are all here. We are missing a few of my colleagues for one reason or another, probably also the difficulty of 

traffic in getting here today. Most of the routes into this place have 

trees laying over them right now. 

Medical tourism refers to the practice of patients seeking lowercost health-care procedures abroad, often packaged with travel and 

sightseeing excursions. Today we will hear about medical tourism 

from witnesses whose perspectives range from a patient who had 

heart surgery in India to a self-insured company that is considering 

adding overseas hospitals as an option in its employee health plan. 

Time magazine reports that 55,000 Americans traveled last year 

to Bumrungrad Hospital in Thailand for a variety of elective procedures. Many patients report they would return again for care in 

the future. 

Patients are not alone in exploring foreign health-care options. 

The West Virginia legislature presently is considering options for 

encouraging State employees to travel abroad for less-expensive 

medical care. Three Fortune 500 companies are investigating the 

best places to outsource elective surgeries. 

With the globalization of health care evolving at a rapid pace, it 

is important that we pause to consider why this is happening. 

The ease of international travel and the growth in quality healthcare facilities in developing countries certainly plays a part. But I 

believe frustration with rising health-care costs in the U.S. is also 

2

a contributing factor. American medicine is less and less competitive. 

Americans should not have to travel overseas to obtain affordable 

health care. Yet health-care costs in the U.S. continue to grow at 

a rate higher than overall inflation. For the Nation’s 46 million uninsured, traveling overseas for low-cost medical procedures, even 

with the added costs of travel and lodging, is now an understandably attractive option. 

You can see on the chart behind me the cost of many surgical 

procedures in foreign hospitals is significantly less than in the 

United States. 

While medical tourism may be attractive to patients who are unable to obtain health care at home, there remain many unanswered 

questions: Does lower cost equal lower quality? Could lower-priced 

medical care provided in developing countries drive down healthcare costs in the U.S.? What will be the long-term impact of medical tourism on the U.S. health-care system? 

To explore these and other related issues related to medical tourism, I am asking several Federal agencies, including the Departments of Health and Human Services, Commerce and State, to convene an interagency task force. 

As globalized health care becomes an increasing reality, we must 

carefully consider the implications for U.S. health care, trade and 

tourism and economic policies. The interagency task force will enable U.S. policymakers to reach informed decisions in response to 

this new trend. 

I am very pleased that our first panel of witnesses is Maggi 

Grace and Howard Staab. He traveled to India in 2004 for Howard’s mitral valve replacement surgery. They will discuss their experiences in trying to negotiate costs with U.S. hospitals and also 

tell us of the care that he received in India. 

So, Howard and Maggi, thank you for being here. We are anxious 

to hear your testimony and to ask you questions. Proceed. 

STATEMENT OF MAGGI ANN GRACE, PATIENT ADVOCATE, 

CARRBORO, NC 

Ms. GRACE. Thank you, Senator Smith and members of the U.S. 

Special Committee on Aging. I appreciate the opportunity to testify 

before you today regarding health—care and the outsourcing of 

medical care to the developing world. 

We are here because in September 2004 I accompanied Howard 

to New Delhi, India, for the heart surgery he needed but could not 

afford in North Carolina, where we live only minutes from major 

medical centers of international reputation. 

Dr. Naresh Trehan replaced Howard’s mitral valve at Escorts 

Heart Institute for a total cost of $6,700 as opposed to the estimated $200,000 at our local hospital. 

We stayed in India for 1 month. By early 2005, Howard was back 

at work full-time; his cardiologist in Durham reports that he is 

fine. 

The fact that everything turned out well for Howard and that 

India provides extraordinary medical care is not why we are here 

today. I am here to tell you how our own country’s health-care sysVerDate 0ct 09 2002 14:04 Nov 07, 2006 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 H:\DOCS\30618.TXT SAGING1 PsN: JOYCE
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tem, supposedly the best in the world, failed us and why we were 

forced to travel halfway around the globe. 

The research I did that led to our choosing India does not make 

me an expert. But in the past few years, I have stayed in the hospital with my parents and friends on seven different occasions. I 

became an eye-witness to the difference in patient care between 

several American hospitals and at least one hospital in India. 

The discoveries I made compelled me to write a book entitled, 

‘‘State of the Heart: A Medical Tourist’s True Story of Life-Saving 

Surgery in India,’’ which will be published in 2007 by New Harbinger Publications. In fact, I have asked Senator Clinton to consider writing the Foreword to my book. 

Companies are springing up all over our country to help patients 

travel to India or Thailand for medical procedures at a fraction of 

the U.S. cost. While I continue to assist these patients, my sincere 

ambition is to see the U.S. health-care system improved so that 

none of us find it necessary to leave our families and our doctors 

to receive medical treatment. 

In 2004, Howard went to his doctor for a routine physical. She 

was alarmed at the sound of his heart and ordered an echocardiogram immediately. The diagnosis: a flailing mitral valve with severe mitral regurgitation. We were shocked. Howard and his 31-

year-old business as a carpenter/contractor were healthy, but Howard had chosen not to have health insurance. 

Howard is not the only one who, though healthy and physically 

fit all his life, will face an unexpected, life-threatening diagnosis requiring immediate attention without health insurance in place. In 

fact, he is only one of over 46 million Americans who remain uninsured, either by financial necessity, denial of coverage, or by choice. 

It is, of course, a mistake to say that our government does not 

provide these people with healthcare. We do. Only we do it in what 

may be the least efficient, the most expensive and least effective 

way possible: by refusing to provide any necessary care until a patient’s illness becomes a medical emergency. Then we do not turn 

them away; only then do we foot the bill. 

I came to understand the absurdity of this system when Howard 

and I faced his diagnosis. 

I requested a meeting with the CFO of our local hospital to explore the entire cost of mitral valve surgery as well as a payment 

plan. Howard was encouraged to apply for Medicaid. But Howard 

was not broke; he is not indigent. He makes a living, and he pays 

his bills. We knew he would not qualify for Medicaid or any other 

hospital discount based on income. 

The hospital bill alone was estimated at $100,000. They expected 

half up-front. The valve itself, the surgeon, cardiologist, anesthesiologist, radiologist and pathologist, all billed separately, would 

bring the total closer to $200,000 if there were no complications. 

The surgeon would also want half up-front. 

I knew that hospitals and doctors contract with insurance companies and agree to accept whatever the companies deem the ‘‘usual 

and customary fee’’ for any given procedure. The CFO agreed that 

self-pay patients are responsible for inflated charges which are arbitrarily set by the provider. 

4

I offered to pay the hospital the full amount that any insurance 

company would pay, with a substantial amount up-front and the 

rest on a payment plan. The CFO said they had no way to do that. 

They were simply not set up to compromise in that way. 

I insisted that Howard could not be the only self-pay patient who 

faced the prohibitive cost of surgery. The CFO admitted he was 

not, but we were the first to come to him ahead of time and talk 

about it. Others, he said, ‘‘Well, they wait until they are brought 

to the emergency room in an ambulance.’’

Where were we, a carpenter and an artist, to come up with 

$200,000 or even half up-front? If we had chosen to wait or if we 

had not found any alternative by turning to another country, I 

would have watched as Howard’s mechanical valve problem made 

his heart work harder and harder until the exertion actually damaged his heart muscle and it began to fail. 

Of course, we would have preferred to stay in the Raleigh-Durham area to be near our family and friends, but we had no intention of waiting until he was in heart failure. Yet this is all our local 

hospital offered us. 

I cannot imagine a worse way to pay for health care: to require 

our emergency rooms to take patients in and pay for healthcare for 

the uninsured and under-insured only when their health problems 

have worsened to the status of an emergency, when those problems 

are the hardest to fix and the care they receive will be as chaotic, 

expensive and risky as possible. 

After learning Howard’s diagnosis, we tried to obtain health insurance for him. His applications turned up astronomical premiums for policies that promised to disallow any claims regarding 

his heart for a year or longer. Howard’s cardiologist said he could 

not wait a year for his surgery so that the insurance company 

would help pay for it; his heart would not last that long. 

We explored every alternative suggested to us, from surgeons in 

Argentina, Mexico and Texas to a robot in North Carolina. We decided to put our trust in Dr. Trehan, a U.S.-trained surgeon and 

founder of Escorts Heart Institute and Research Center, a state-ofthe-art facility in New Delhi. 

He estimated the total cost of Howard’s hospitalization, including 

all tests and doctors, would be under $10,000. We asked Howard’s 

cardiologist for her blessing, applied for the appropriate visas, and 

flew to India. 

A friend created a Website, howardsheart.com, so I could communicate with our family and friends while we were abroad. The 

Website still draws global attention of patients, doctors, entrepreneurs, policymakers and researchers interested in what most 

call ‘‘medical tourism’’ and what we still consider to be the best option we had. We were not tourists seeking an exotic vacation while 

having inexpensive medical treatments. We were fighting for Howard’s life. 

Our experience in India was successful. The total cost of our bill 

was $6,700 all-inclusive. 

Howard was the first American to have heart surgery at Escorts. 

The world was watching. The media—CNN, ‘‘60 Minutes,’’ 

Bloomberg Magazine, The Washington Post, the Times of India 

5

and, most recently, Time magazine—would not be paying attention 

to an issue that was not of global concern. 

Here are some relevant observations. 

Insurance companies allow less than one-third of doctors’ and 

hospitals’ charges, and they pay only a percentage of that. 

Even if doctors discount their fees for self-pay patients, the hospital bill is prohibitive. 

The Center for Disease Control recommends innoculations for 

travel to specific countries. Insurance companies disallow claims for 

preventative immunizations for travel, yet they will cover treatment for those diseases if their insured subscribers might contract 

them overseas. 

Procedures are often available in developing countries years before the FDA approves them in the U.S. An example is the recent 

hip resurfacing that has just been approved. 

Highly skilled nurses in our hospitals are stretched beyond 

human limitations. Patients receive care based on degree of emergency. This means patients wait. During my seven stays in the hospital, I have changed bed linens myself, bathed and fed patients. 

I caught a disoriented patient climbing out of bed, tangled in her 

I.V. lines. 

We, as a country, value longevity over quality of life. Legislation 

supports this position. Looming malpractice suits keep doctors ordering tests and introducing extreme measures that are often unnecessary, unwanted, and always inordinately costly. Individuals 

who do not believe in prolonging life at any cost devote enormous 

amounts of their time and money to fight for the rights of their 

loved ones to end their lives with dignity. Choice is replaced with 

unwarranted expense for patients and health-care providers. 

In summary, if I were faced with the opportunity you now face, 

to heal a broken system of caring for the American people, I would 

begin with the end result. I would ask myself, what would a 

healthy nation look like? How can we make at least preventative 

care accessible and affordable? Why do we link employment with 

healthcare? What are the real costs of tests and medical devices? 

What is a reasonable margin of profit? How can we take the terror 

out of healthcare for everyone involved? 

You have an opportunity to listen to and answer millions of 

Americans, not only the uninsured and the under-insured, but employers, insurance companies, hospitals, doctors, nurses, patients 

and family members who are screaming, ‘‘Crisis.’’ We are calling 

for help. Please don’t send us away. 

Thank you. 

The CHAIRMAN. Maggi, you ask what is a reasonable profit. I 

can’t help but think that the difference between $200,000 and 

$6,700 will put a lot of pressure on the $200,000 if Howard’s story 

continues to go out. I mean, that is a staggering difference. 

I wonder if you can speak to the quality difference. I mean, obviously the result was as good as, I guess, you could hope for, because he was a U.S.-trained physician. I assume it was done in a 

hospital. 

Ms. GRACE. An extremely state-of-the-art facility that is impeccable compared to the ones I have stayed in here. 

6

The CHAIRMAN. So when you went into that, there was no quality 

diminution between that and others that you had seen in the 

United States? 

Ms. GRACE. Only in the reverse. 

The CHAIRMAN. It was better. 

What was the cost in terms of travel and time, lost wages and 

things like that had it been done here? What do you add onto the 

$6,700? 

Ms. GRACE. Well, the longer version, which is in my written testimony, is that we were in the hospital a total of 3 weeks, both of 

us with three meals a day—well, when he could eat. I stayed with 

him. The quote of the $200,000 estimate was for a 5- to 7-day stay 

and one surgery. So it would have been way more than that, had 

we been here to do that. 

The quality of care over there was extraordinary. It was quick. 

Howard never waited once for a test or for a prompt response from 

the nursing staff or the doctors. 

Of course, you know, he was the first American to be there, so 

there was this attention. But I never saw anything different for 

anybody else there. 

The CHAIRMAN. Were your physicians here—I mean, you said 

they released you to go and do this. Obviously that must have included that they would take you back when you came. 

Ms. GRACE. Yes, sir. 

The CHAIRMAN. Did they warn you about anything that proved 

not to be true? I mean, were there things that they said, ‘‘Well, yes, 

but you are running a real risk if there is a complication. You won’t 

have any legal recourse’’? Or did you have legal recourse? 

Ms. GRACE. People have asked us that since we came back. No 

one asked us in the few days before we left because we went in a 

very big hurry. I wasn’t thinking about suing anybody if something 

happened to Howard, and I don’t think he was. It was the farthest 

thing from our minds. 

In answer to your question about Howard’s cardiologist, we were 

relieved when she said she had done her homework with her colleagues and found out that we were right, that India was an exceptional choice and that they were all U.S.-trained doctors—a lot of 

them were U.S.-trained doctors, and Dr. Trehan was of the highest 

reputation. 

She had no problem with us going, except Howard shouldn’t have 

been traveling. So, we went with his medical records. I talked to 

all the pursers on the flight and made sure they understood that 

if he should go into some kind of shortness of breath or breathing 

problems or heart problems that they knew what to do. 

The CHAIRMAN. What airline were you on? 

Ms. GRACE. KLM was in there, but I forget what we started on. 

American? No, Continental and then KLM. But I had to speak to 

each one so they knew what we were doing. 

The CHAIRMAN. Is this doctor in India and is India, as a nation, 

are they advertising to get more business like this? 

Ms. GRACE. It is, in fact, just the opposite. I mean, I think they 

would like to think they are. But in terms of what we do in America to advertise, I don’t think they are up to speed on it. 

7

They have a Website, but the Website isn’t geared to respond to 

you in 24 hours. I think we have been accustomed to immediate response when we e-mail somebody or contact a Website. 

So they have patients from all over, from Britain and neighboring countries and Saudi and places like that. But we were the 

first Americans to actually persevere long enough to get through 

and go. 

The CHAIRMAN. I am interested in your comments about insurance and what they would pay for and what they wouldn’t pay for. 

Now, you did not have insurance. Is that right, Howard? 

Mr. STAAB. Correct. 

The CHAIRMAN. Now, if you had had insurance, would they have 

discouraged you from going over? Were you told that by insurance 

companies, ‘‘Don’t go to India; we won’t pay for it’’? 

Ms. GRACE. Well, we learned that afterwards. But it didn’t come 

when we applied for insurance. That was the first thing I did, was 

to try to see if we could get Howard a policy. Even if it would be, 

you know, enormous premiums, we thought it still could work out 

financially for the $200,000 and that it would be better. But then 

they would disallow anything related to his heart for a year, and 

he wouldn’t have lived that long. 

The CHAIRMAN. I would think an insurance company would be 

very interested in lower expenditures for health. 

Ms. GRACE. Well, the premium for Howard was $300-and-something. I contacted my Blue Cross broker and just said, ‘‘What is it?’’ 

He said, ‘‘Well, it is about $300.’’ Then I told him the mitral valve 

diagnosis, and he came back with $1,600 a month and no coverage 

for the heart for a year. 

So, we did the math on that and tried to figure out, if he had been paying $300 a month for all this time, would it have still covered the $200,000? Anyway, it was——

The CHAIRMAN. But you paid out of pocket, and you got——

Ms. GRACE. With a credit card. They said, ‘‘Do you have a Visa?’’ 

So it was simple. 

The CHAIRMAN. Well, yours is an amazing story. You have published it through all the outlets you spoke of, ‘‘60 Minutes’’ and—

Ms. GRACE. They contacted us, but yes. 

The Website still is this huge magnet, people find us somehow. 

I don’t know if they are looking under—I never called it ‘‘medical 

tourism’’ until the publisher renamed my book. But I don’t know 

how they found us. 

But as soon as the Times of India picked it up. The day after we 

arrived in Delhi, the Times of India picked it up. We had something like 2,000 hits on the Web site that morning. So it sort of 

spread like fire after that. 

The CHAIRMAN. I read Tom Friedman’s book, ‘‘The World Is 

Flat.’’ Were you included in it? I don’t recall. 

Ms. GRACE. I don’t know. 

The CHAIRMAN. You may need to add another chapter. 

Ms. GRACE. We have been in several books. The Cato Institute 

included Howard’s story in their book last year. Researchers have 

been calling from all around. People are doing doctoral work on 

this issue. So I expect we have popped up in places we don’t even 

know. 

8

The CHAIRMAN. Well, you are making history here. We are 

thankful for your willingness to come and share this very remarkable story. 

Howard, you look great. Are you back to work now? 

Mr. STAAB. Thank you very much. I am working full-time building homes and loving my days. 

The CHAIRMAN. Well, we wish you the very best. 

Mr. STAAB. Thanks. 

The CHAIRMAN. You have added a great deal to the meeting of 

this morning and the Senate record. We thank you very, very 

much. 

Ms. GRACE. Senator Smith, you asked me a question that I realized I didn’t answer. 

The CHAIRMAN. Well, you can answer it. 

Ms. GRACE. Well, it will just take me one second, and that was 

about the difference in quality of care. 

I think one of the most impressive things I have learned to tell 

myself is that if I have an elective procedure that is required—’’elective’’ meaning I am not in an ambulance—I will seriously consider 

going to India, even though I have Blue Cross-Blue Shield that 

would probably pay 80 percent. Because not only would it probably 

be cheaper than the 20 percent I would have to pay, but I believe 

the care would be far better than I would get here. 

The CHAIRMAN. That is——

Ms. GRACE. Thank you. 

The CHAIRMAN [continuing]. Quite a testimony. Thank you very 

much, both of you. 

Ms. GRACE. Thank you. 

Mr. STAAB. Thank you. 

[The prepared statement of Ms. Grace follows:]

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The CHAIRMAN. We will now call up our second panel. 

They will include Dr. Arnold Milstein, who is the chief physician 

at the U.S. Health Care, Thought Leader at the Mercer Health and 

Benefits. He also serves as a MedPAC commissioner. He is consulting three Fortune 500 companies that are investigating options 

for offshoring elective medical procedures for their employees. 

We will also ask Ms. Bonnie Blackley, who is the benefits director for Blue Ridge Paper Products in Canton, NC. Blue Ridge is in 

the process of expanding its employee insurance plans to offer overseas health-care options. 

They will be joined by Mr. Rao. Mr. Rao is the CEO of 

IndUSHealth, a global health-care service company that arranges 

for Americans to obtain medical care in India. We are going to 

want to know about that advertising program. 

Dr. Bruce Cunningham is the president of the American Society 

of Plastic Surgeons and will be discussing patient safety issues. 

We appreciate so much all of you being here. 

Dr. Milstein, why don’t we start with you? 

STATEMENT OF ARNOLD MILSTEIN, MD, MERCER HEALTH 

AND BENEFITS, SAN FRANCISCO, CA 

Dr. MILSTEIN. Thank you, Mr. Chairman. 

Several innovative large American employers asked me to assess 

the feasibility of using advanced hospitals in lower-wage countries 

to provide non-urgent major surgeries. They intend to add them to 

their U.S. hospital networks and incentivize U.S. employees and 

dependents to use them. 

Large employers are pursuing this option for three reasons: first, 

lower cost. The typical combined facility and physician charges per 

surgery in these hospitals is, based on my international shopping 

observations, 60 to 85 percent lower than insurer-negotiated 

charges in the U.S. 

The CHAIRMAN. Sixty to 85 percent? 

Dr. MILSTEIN. Yes. In exhibit A, I have shared the international 

prices that I have been able to obtain through phone calls on behalf 

of these large employers. 

Sixty to 85 percent cost reduction for major surgeries would easily offset travel, and first-class hotel costs both for the patient and 

an accompanying family member. It would also fund a sizable economic incentive for the patient and generate large residual savings 

for the sponsoring employer. 

The second reason is trusted quality-of-care accreditation. The 

Joint Commission, or JCAHO, accredits most U.S. hospitals for 

participation in the Medicare program. JCAHO also has accredited 

88 non-U.S. hospitals via its Joint Commission International affiliate. Many of these hospitals offer board-certified surgeons who 

trained at U.S. or UK teaching hospitals. 

The third reason is their sense of fiduciary responsibility. American human resource executives feel obligated to pursue any solution that would benefit both employer and employee. This obligation is felt most strongly among employers and labor unions with 

substantial numbers of lower- and lower-middle-income workers 

who can least afford to pay more for health care or for health insurance. 

19

The fastest percentage point rise in uninsurance among working 

adults is now in the middle quintiles of American working household incomes. In 2006, the average health spending for a working 

family of four exceeded the entire annual earnings of a minimumwage worker. Two thousand four was the first year in which average state Medicaid spending exceeded state K–12 education spending. 

The outmigration of Americans for surgical care is a symptom, 

not a solution. The emotional benefit of close access to familiar 

physicians, friends and family will remain important for major surgeries. In addition, many other countries do not offer consumers 

meaningful redress for healthcare negligence. 

The interests of non-wealthy Americans and their employers 

would be far better served by a U.S. health-care system that aggressively and perpetually re-engineered its processes to deliver an 

internationally distinguished level of quality at a much lower cost. 

In their joint 2005 report, the National Academy of Engineering 

and the Institute of Medicine estimated that 30 to 40 percent of 

current U.S. health-care spending is attributable to waste from insufficiently engineered processes of care delivery. 

However, until America’s major public and private payors better 

collaborate in creating a profoundly more performance-sensitive environment around American physicians and hospitals, well-engineered care delivery will remain purely conceptual and our hospitals will continue to fall short in international benchmarking of 

value. 

The most important first collaborative step in creating a more 

performance-sensitive domestic healthcare environment is public 

access in beneficiary anonymized format to the physician-identifiable full Medicare claims database. Its analysis by the private sector would rapidly enable American consumers and purchasers to 

identify and better reward surgeons and other American physicians 

who excel in efficient total healthcare resource use, as well as in 

quality. 

This, in turn, would send a transformative message throughout 

America’s entire healthcare supply chain, including to hospitals 

and investors in new bio-medical technology. That supply chain is 

exquisitely sensitive to physician signals. It would be transformed 

by a new physician-mediated message that improvements in both 

affordability and quality will be rewarded best. 

By creating a highly performance-sensitive environment around 

our domestic health industry now, we can staunch and eventually 

reverse the flow of Americans traveling abroad to find more affordable care. 

The proximate root causes of American hospitals’ loss of domestic 

market share are lower wages in less-developed countries and discriminatory pricing by global drug, device and equipment manufacturers. One step upstream in the causal chain is insufficient collaboration by America’s public and private purchasers to mold a 

U.S. healthcare industry that delivers world-class value through 

superior process engineering. 

Thank you, Mr. Chairman. 

[The prepared statement of Dr. Milstein follows:]

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The CHAIRMAN. Doctor, what do you think of what Howard did, 

going to India like that? 

Dr. MILSTEIN. I think it was a wholly reasonable response by a 

well-informed, value-seeking American consumer. 

The CHAIRMAN. The three Fortune 500 companies you are advising, would you advise them to look at Howard’s option? 

Dr. MILSTEIN. Yes, I would. 

The CHAIRMAN. But the point of your testimony, though, is 

America ought to fix its system so Americans don’t have to go 

abroad. 

Dr. MILSTEIN. Absolutely. 

The CHAIRMAN. Won’t this growing competition have the downward pressure that will help to drive that? 

Dr. MILSTEIN. I think it will. Although, you know, my sense of 

where we stand based on the Institute of Medicine estimates of 40 

percent waste in current American health-care spending, you know, 

suggests we may need more than one source of pressure. 

The CHAIRMAN. Yes, exactly. I will probably have another question for you, but thank you very much. 

I think we are exposing to viewers on C-SPAN remarkable options that actually exist out there. Frankly, I can think of an awful 

lot of Oregon companies who are now looking to do these kinds of 

things and are negotiating union contracts where this is an option. 

They have no choice. Economically they can’t sell enough of their 

widgets to pay for the rising cost of health care. 

I think one of your points is that it is not just from one price 

pressure on the system. It is drug companies. It is equipment suppliers. It is obviously cost of litigation. All of these things have upward pressure on American pricing. 

Dr. MILSTEIN. Yes. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Bonnie Blackley, take it away. 

STATEMENT OF BONNIE BLACKLEY, CORPORATE BENEFITS 

DIRECTOR, BLUE RIDGE PAPER PRODUCTS, CANTON, NC 

Ms. BLACKLEY. Senator Smith, thank you. 

Blue Ridge Paper Products in Canton, NC, is a paper products 

manufacturer. Our company was built by Champion International 

Paper in 1908. 

In May 1999, local union employees partnered with a venture 

capital fund to buy the assets. The employees’ stake was financed 

through a 15 percent reduction in wages, and wages and benefits 

were frozen over the 7-year term of the buy-out agreement. 

We have about 2,100 employees, predominantly male, over age 

48, with decades of service and several health risk factors. They 

work 12-hour, rotating shifts, making it extremely difficult to manage health conditions or improve lifestyle. Our health-care claims costs at the end of 2000 was just over $13 

million. At that time, we projected that if left unchecked, 2006 

year-end costs would be $36 million. 

Since 2000, we have made plan revisions and developed and implemented several innovative cost-control programs. For example, 

we have an onsite medical center. We have put in population 

health management. 

27

These actions will result in 2006 claims costs of $24 million. 

Though not the $36 million projected, health-care claims have increased over 75 percent since 2000. 

What is the impact of these claims on our bottom line? Since the 

union buy-out in 1999 to the end of 2005, we have paid out $107 

million in health-care claims. Our company has lost $92 million 

since the buy-out. 

Even with our single-digit yearly cost increases, I can’t help but 

think, if the provider community had responded to our requests for 

help over these past few years, we could have been a profitable 

company. 

Clearly, continued medical cost trend is unsustainable, even for 

financially sound employers with younger, healthier employees. 

Ever-increasing health-care costs have contributed to slower profit 

growth, lower wage hikes, a delay in hiring new permanent workers, and an erosion of employee benefits. 

We are very concerned about our ability to continue to provide 

retiree medical coverage, which is a bargained benefit for our hourly people. As a matter of fact, March 1, 2005, we eliminated retiree 

health coverage for our salaried employees. 

Employers are angry. We are fed up. We are desperately seeking 

relief from a system that ranks 37th worldwide in quality of care, 

but it costs more per capita than other industrialized nations. 

We do not get commensurate value for our health-care dollar. We 

are not treated as paying customers; are not reimbursed for medical errors and hospital-acquired infections. We are constantly told 

by health-care leaders that American health care is the best in the 

world, yet employees feel compelled to hire patient advocates. CMS 

announced in March that they plan to provide cancer navigators to 

certain patients as answers for coping with today’s medical system. 

Employees are so desperate for health care that they are willing 

to commit fraud on employment and insurance forms to obtain coverage for themselves or ineligible family members. Why do we tie 

health coverage to employment? 

Running out of ideas on how to cut costs, a segment on ‘‘60 Minutes’’ several months ago caught my attention. I began seeing articles in trade publications about medical tourism, which we like to 

call global health care, the uninsured and the under-insured having surgery at outstanding surgical facilities in other countries. 

The more I read, the more intrigued I became. Hospitals approved by Joint Commission International and compared to fivestar hotels, surgeons credentialled in the United States, registered 

nurses around the clock, expenses 80 to 90 percent cheaper, and 

better outcomes. Why not? 

After reading about IndUSHealth, I contacted them to see if they 

would be willing to work with us to make our services available to 

our employees. IndUSHealth agreed to meet with our benefits task 

force. Initial shock changed to curiosity, curiosity to interest, and 

interest to an ‘‘a-ha’’ moment. 

IndUSHealth has helped us create a DVD that will soon be 

mailed to our employees. The DVD explains the process of having 

surgery in India and includes testimony from individuals that have 

been to India for surgery. The DVD message encourages interested 

28

employees to be part of an employee group that will be traveling 

to India in the near future as a part of our due diligence process. 

Surgery in India will not impact the benefit levels of our current 

plan. Whatever benefit plan is chosen by the employee, the option 

to have surgery performed in India is a personal choice. The benefit 

level for this option will be 100 percent reimbursement for expenses, plus an additional cash incentive to be used to cover the 

cost for a companion to accompany the member. 

Employers compete in a global marketplace with a global economy. We can address our health-care crisis, or we can outsource it. 

With healthy competition, our health providers will become more 

efficient and productive, provide better services and products, be 

held responsible for inferior service, or go out of business just like 

the rest of us. 

Thank you. 

[The prepared statement of Ms. Blackley follows:]

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The CHAIRMAN. Bonnie, you described the employees’ response to 

this. First, as I take it, it was somewhat shocked and offended 

maybe? Or necessity required that they listen and consider? 

Ms. BLACKLEY. We have spent since 2000 educating our employees on the costs of health care. It is their company; the union actually bought our company. They are very aware of what our healthcare costs are year to year. 

We have been out-of-the-box, innovative. This was another opportunity for our benefits task force to take a look at some unusual 

responses to health-care costs. 

After our task force meeting in which IndUSHealth was there 

and they explained the process, you could tell every slide that they 

showed, more and more people were going, ‘‘Oh, my gosh, we never 

knew about this.’’ I even had one guy call me after the meeting, 

and he said, ‘‘Is it wrong to want surgery to go to India?’’ We really 

had some excitement there. 

This sounds like a good deal. It sounds like excellent health care. 

It is affordable. This will save our company a lot of money. 

The CHAIRMAN. Was it an ESOP that the union did? 

Ms. BLACKLEY. Yes, it was. 

The CHAIRMAN. The employees bought it. 

Ms. BLACKLEY. Yes. 

The CHAIRMAN. Generally unions are very down on outsourcing, 

but they are obviously encouraging this outsourcing. 

Ms. BLACKLEY. It is very unusual to have union members that 

also are owners. So a lot of times, I think they are at conflict. Even 

as our health-care costs have gone up, they want to keep their benefits. They know we are struggling to be able to afford to do that. 

As a matter of fact, we just bargained and negotiated with the 

union last week. I don’t even know the outcome of those negotiations. 

But our folks are hurting. They have not had any wage increases 

for 7 years. They gave up 15 percent of their benefits in order to 

finance the company. We are really searching. 

We have had two employees in one of our locations that had to 

have major surgery. One was a heart valve replacement. The other 

was a transplant. They had worked for us less than 3 months. Obviously some questions on their post-employment information were 

not correct. 

Folks are shopping for employers to see who has good health coverage so they can afford to have these surgeries. I think it is correct to say that people are putting these things off until it is absolutely an emergency. 

The CHAIRMAN. Can you describe the procedures? Is it heart surgery, cancer? 

Ms. BLACKLEY. The heart valve replacement, we actually got a 

proposal from IndUSHealth. Here it was going to cost anywhere 

from $68,000 to $198,000. That was the range of costs that we received from the hospital. 

The proposal we got from IndUSHealth was for that patient and 

a companion. Here you would have been in the hospital 3 to 5 days; 

there, 10 days with an 8-day recoup period at a resort. Everything 

included, travel, food, was $18,000. 

34

So we were looking at the difference between $18,000 and, bestcase scenario, $68,000. So it is very attractive for employers to take 

a look at global tourism. 

The CHAIRMAN. Have the numbers of your employees increased 

dramatically going to IndUSHealth? 

Ms. BLACKLEY. That was the first actual proposal that we have 

gotten. We have not actually rolled this benefit out to our employees yet. We will be doing that in the next few weeks. 

So until we actually roll this out to all of our employees, we have 

been looking at situations that we find out about on an individual 

basis to see if they might be a candidate for going to India. It is 

just a matter of time. 

The CHAIRMAN. Very good. Thank you so much, Bonnie. 

Mr. Rao. 

STATEMENT OF RAJESH RAO, CEO, INDUSHEALTH, RALEIGH, 

NC 

Mr. RAO. Thank you, Senator Smith. Thank you for the opportunity to testify on a topic that hits very close to home for us and 

why we have created this company called IndUSHealth. 

I am the CEO of IndUSHealth. It is a company based in Raleigh, 

NC. It provides a global health-care service. It addresses the problem of growing lack of access to affordable health care faced by an 

increasing number of our citizens and employers throughout the 

U.S. 

With health-care costs having grown to levels that were just unimaginable just a few years ago, there is a universal desire to exploit opportunities to stretch our health-care dollar. 

IndUSHealth provides one such attractive opportunity, by 

unlocking the gates to affordable health care. We offer high-quality 

medical treatment and travel programs for U.S. patients desiring 

care in world-class hospitals in India as an alternative to what has 

become oppressively expensive care in the U.S. 

Why India? Well, there are several reasons. India is rapidly 

emerging as a world leader in global medicine, with over 150,000 

patients having visited India for medical procedures from overseas. 

Super-specialty hospitals in India have made significant investments in the recent years to build and staff state-of-the-art facilities with the latest equipment and consumables, many of which 

are, in fact, sourced by American companies. 

Not only have these hospitals introduced several amenities to 

cater to the unique needs of patients going from the U.S. and other 

international patients, they have also been able to attract several 

U.S.- and U.K.-trained physicians to return to India to practice at 

their facilities. With over 37,000 physicians of Indian origin practicing in the U.S., many Americans are already comfortable with 

the talent and expertise of Indian physicians. 

The quality of care available at these leading hospitals is comparable to the best institutions in the U.S. With a focus on advanced research and having implemented processes that have 

helped them get accredited by the U.S. Joint Commission, these 

hospitals now boast outcomes that are amongst the best in the 

world. 

35

Top-flight, one-on-one nursing care is made available to patients 

around the clock. Their fluency in English allows Indian doctors, 

nurses and administrators to communicate well with American patients. 

Above all, India is able to offer a large and sustainable cost advantage. By bundling unique services that are geared to the unique 

needs of international patients, Indian hospitals are able to command premium price points, which, from our standpoint, still remain a mere fraction of the U.S. costs. 

When it comes to cost differential, there have been numerous 

cases where, expensive procedures, as the previous panelists have 

described, are available at somewhere between 10 to 20 percent of 

the equivalent cost in the U.S. 

So what is the IndUSHealth advantage? Recognizing the opportunity to provide a meaningful solution to a growing problem, 

IndUSHealth has now formulated a well-structured offering that 

connects individuals and companies to affordable, high-quality 

health-care facilities overseas. 

We have established key partnerships with India’s premiere hospitals and physicians that help us offer an integrated process while 

assuring the highest levels of service to our patients. We provide 

personalized case management and handle the complexities of dealing with health-care providers on the other side of the globe. We 

work with local physicians to assist with pre- and post-operative 

needs of the patients. We also take care of exchanging medical 

records and making travel arrangements for patients. 

Making sure that each patient is well-informed and assured of 

the highest standards of care at the lowest cost possible is an important part of IndUSHealth’s offering. 

We have helped treat several patients overseas for a wide range 

of treatments. The majority of our patients have never traveled 

abroad, yet they have educated themselves and arrived at the conclusion that their needs will be best met outside our borders. 

They are always delighted and provide glowing testimonials of 

the level of care and attention that they receive all throughout the 

process. Their collective experiences have proven that it is indeed 

possible to overcome the perceived difficulties and emotional barriers that many Americans face when first exposed to this new concept. 

Our elderly patients are thrilled to have an option that keeps 

them from having to wait for Medicare benefits. Often taking care 

of their ailment sooner helps them improve the quality of their life 

and allows them to lead self-sufficient and independent lives. 

We coordinate with self-insured employers seeking to lower expenses by offering our services as an option to their employees. 

Statistically, since a relatively small number of cases result in the 

biggest expenditures, employers are able to save up to 20 percent 

of their medical costs even if a relatively small subset of their plan 

participants elect to go overseas for care. This helps them avoid the 

less attractive alternatives of reducing head-count or reducing profitability. 

So by paving the path for individuals and employers to access 

low-cost, high-quality health care in India, IndUSHealth is proud 

to play a key role in providing access to health care for a growing 

36

number of our citizens and to help them lead healthy, independent 

and productive lives. 

Thank you. 

[The prepared statement of Mr. Rao follows:]

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The CHAIRMAN. Mr. Rao, what kind of medicine is provided to Indians? Is it a national health-care system? 

Mr. RAO. It is not. It is basically a private——

The CHAIRMAN. Fee for service? 

Mr. RAO [continuing]. Fee-for-service system. So most of these 

hospitals have an obligation to price their services in a way that 

obviously caters to the large array of circumstances, including local 

care as well as people coming from overseas. 

The CHAIRMAN. Your facilities, have you built those and staffed 

them for the Indian nation or for this international market? Have 

you seen a niche here that you are trying to fill? 

Mr. RAO. We built this primarily to serve the needs of Americans, because we noticed that we are becoming less competitive as 

a country because of the challenges that we face in our health-care 

costs and how that translates to a burden for all of us. We are all 

ending up paying the increased costs in one way or the other. 

Employers, particularly, are challenged with having to make 

some very hard decisions on how to contain costs. 

The CHAIRMAN. How competitive would your services be for an 

Indian as against a hospital on the other side of the city? Would 

yours be more expensive? 

Mr. RAO. It would be more expensive. Mainly because it has got 

the added amenities built into it in terms of catering to typically 

a companion that goes with the patient, having a larger room at 

the hospital, providing for travel services back and forth, and creating an experience that basically makes the person feel like they 

have a concierge service, which the locals don’t need because they 

have a support structure around them. 

The CHAIRMAN. Do Europeans use this, or just mostly you are 

marketing this to the American people? 

Mr. RAO. Our company’s thrust is entirely in North America and 

for Americans and Canadians right now. There are others that 

serve other markets. For us, frankly, it is a whole different ball 

game if we want to try to enter and solve the needs of other citizens of other countries. 

The CHAIRMAN. What percentage of Americans, what percentage 

of Canadians are you serving? 

Mr. RAO. Right now, it is roughly 80–20, majority Americans, a 

smaller percentage of Canadians. 

The CHAIRMAN. Bonnie, I am wondering if you think your employees are going to use IndUSHealth. Obviously they have a brochure, a program, a slide show that shows them a facility apparently that is very much like what they would find in North Carolina. Do you think they are apt to take that? 

Ms. BLACKLEY. I think that the DVD that we are going to send 

out to our employees is going to go a long way in explaining the 

process, showing how it works. 

We are also going to have a group of employees, volunteers that 

will be going to India in the next few weeks to take a look at it, 

to come back, so that employees, union members, management—we 

can actually get the word out as to what we saw, what we experienced, what did we believe is the quality of care in India. 

43

The CHAIRMAN. Mr. Rao, what kind of increases have you seen 

in this niche that you are filling? I mean, you don’t have to tell me 

your sales, but have you seen a lot of growth? 

Mr. RAO. It has been tremendous. Compared to last year when 

it was in its infancy, just starting out, there has been a lot of interest now. The news stories are certainly helping people become 

aware of this faster. They are all anxious to know if, in their circumstance, they can take advantage of it. 

The CHAIRMAN. You obviously know part of the overhead of an 

American facility relates to malpractice insurance. What kind of assurances do you give, and what kind of recourse do patients have? 

Mr. RAO. Well, the Indian system also has a similar structure. 

The costs are much lower; the awards, in case of any kind of litigation, are also proportionately lower. 

So we inform patients of what they do and don’t get in that system, and the fact that there are problems in the way the care was 

delivered overseas, they would have to deal with a foreign court 

system in order to——

The CHAIRMAN. Well, your facility is subject to American law because you do business here and you have a headquarters here as 

well, I assume. 

Mr. RAO. We do. 

The CHAIRMAN. But your outcomes have been good? 

Mr. RAO. Yes. 

The CHAIRMAN. That is a very commendable model. Certainly, as 

somebody who believes in competition and who has dealt with it in 

his own industry, I salute you for your vision and your insight and 

your competitiveness. 

Mr. RAO. Thank you. It is delightful to be able to help people 

who have essentially run out of options. It is always wonderful to 

get engaged with them and prove that there is a way out for them. 

The CHAIRMAN. Would it be fair to say that most of your clientele 

are middle-class Americans? They are not necessarily—they are 

people who are running out of options who are looking, or who 

don’t have health care, or who have a union plan that has this benefit but the cost is there, the co-pay is much higher, and then the 

union is saying to the company, ‘‘This is another option,’’ and the 

cost is way down there. Are those your clients? 

Mr. RAO. That is primarily our client base, the middle-class. 

There are also some unique treatments available in India. We do 

have folks from, a different standpoint try to access services that 

are just fundamentally not available here because either they are 

not yet FDA-approved or they are undergoing trials at this stage. 

So we do provide them a service, and we find that there is a lot 

of interest in that as well. 

The CHAIRMAN. Are you coordinating any of your services with 

India Air or the airlines generally to——

Mr. RAO. Not yet. Right now we are keeping it very competitive 

because we find that, depending on when someone wants to go and 

what sort of specific travel preferences they have, it is very hard 

to get a single airline to really cater to all the needs out there. So 

we instead have a way to get them excellent, rates at any airline. 

44

The CHAIRMAN. But are airlines aware of medical tourism? Are 

they taking any interest in it? Are they providing any services to 

cater to it? 

Mr. RAO. The airlines, interestingly, have rules set up to take 

extra care of patients anyway. 

The CHAIRMAN. Anyway. 

Mr. RAO. So we can essentially piggyback on that. 

We are looking at concierge services, obviously, at the airports, 

at the destination. We provide that to our patients. At the transit 

points, we are looking into how the airlines could go the extra step 

for them. 

But they already have special services in place to cater to those 

that need extra care getting back and forth. 

The CHAIRMAN. Can you describe the breadth of the procedures 

you make available at IndUSHealth? Is it plastic surgery? Is it 

heart surgery? Is it——

Mr. RAO. It has included plastic surgery. Although we had started out looking at cardiac, any orthopedic types of procedures, we 

have found that there has been a lot of interest in cosmetic and 

dental as well. There is a lot of interest in expensive dental surgeries. 

The CHAIRMAN. OK. Macrofacial surgery as well. 

Mr. RAO. That is right. 

The CHAIRMAN. Are your physicians, are they by and large U.S.-

trained? 

Mr. RAO. They are. They are U.S.- and U.K.-trained for the most 

part. 

The CHAIRMAN. U.K.-trained. It is an amazing model. Congratulations on your success. 

Mr. RAO. Thank you. 

The CHAIRMAN. Bruce Cunningham 

STATEMENT OF BRUCE CUNNINGHAM, MD, PRESIDENT, AMERICAN SOCIETY OF PLASTIC SURGEONS, MINNEAPOLIS, MN 

Dr. CUNNINGHAM. Chairman Smith, thank you very much for the 

opportunity to appear today. My name is Dr. Bruce Cunningham. 

I am a board-certified plastic surgeon. I am the chairman of the 

Department of Plastic Surgery at the University of Minnesota. I 

am currently the president of the American Society of Plastic Surgeons, ASPS. 

I want to thank you for the opportunity to appear today. Perhaps 

as a provider, my viewpoint might be a little bit different than 

some of the viewpoints of the policymakers. 

The American Society of Plastic Surgeons is the largest organization of board-certified plastic surgeons in the world, with over 6,000 

members. 

We have probably discovered cosmetic medical tourism long before these other movements have been described and have noted 

the attention that has been paid to it. We are concerned about the 

growth of it, particularly in the area of elective cosmetic surgery. 

Although numerous factors are likely involved in the growth of 

medical tourism, there is at least anecdotal evidence to suggest 

that patients considering care outside of the States are basically 

doing it with the motivation of price-saving. 

45

ASPS has a long-standing commitment to enhancing patient 

safety and improving the quality of care for our patients. We believe that some of the best plastic surgeons in the world are our 

board-certified members here in the United States. 

For those who choose to go overseas for elective surgical procedures, however, there are a number of critically important issues 

to consider. We believe patients should make this decision very 

carefully, in essence, caveat emptor, buyer beware. 

Without a complete understanding of the medical standards for 

the health institution or facilities, the medical providers, their surgical training and credentials, and also the post-operative care associated with surgery, a patient can be ill-informed and, worse, at 

significant risk. 

Foremost, it is important to realize that surgery is serious business, and cosmetic surgery is no different from other surgical procedures. Every surgery, including cosmetic surgery, has a degree of 

risk. As a board-certified plastic surgeon, I manage and reduce 

these risks every day. It is part of my overhead. 

Patients who choose to travel abroad for a cosmetic surgery vacation, with price as a driving force in their decision, may be making 

an exceptional decision that could increase their risk factors. These 

patients are susceptible to unwanted and, in some cases, disastrous 

outcomes. 

I am personally well aware of cases which are reported in the 

media and which confront myself and my colleagues and other physicians of patients returning to this country with disfigurement and 

nearly fatal infections associated with unaccredited hospitals and 

unlicensed providers. 

Patients simply cannot make informed decisions about medical 

care or establish a proper patient-physician relationship from a 

travel brochure. 

Some medical tourism trips are marketed as vacations. Risks 

may increase as procedures are performed during cosmetic surgery 

vacations. Although enticing, vacation activities are often not appropriate for recovery after any kind of surgery. Precautions and 

appropriate care must be received in order for the patient to properly heal and reduce the possibility of complications. 

Infections are the most common complication seen in patients 

that go abroad for cosmetic surgery. Other complications can include unsightly scars, blood collections, and unsatisfactory results. 

Travel combined with surgery can also significantly increase the 

risk of complications, such as blood clots following the long flights 

required to reach these overseas destinations. 

Complications can also occur during surgery in even the best 

hands and may require acute care and hospitalization. An important consideration is whether the quality of the health-care institution and the medical provider is truly comparable to what the patient would receive at home. In some cases, as we have seen, the 

answer may well be yes. In other cases, the patient may be taking 

a large gamble with their health care and well-being. 

As the profit margins of these overseas operations increase, less 

scrupulous and qualified individuals would be tempted to enter the 

market, which is certainly what we have seen in cosmetic surgery. 

46

Also in many cases, post-operative care is nearly as important as 

the procedure itself. How will this care be given, by whom, and for 

how long following these surgical procedures? 

The potential for post-surgical complications, as with any surgery, present particular challenges for the medical tourism patient. 

What happens to the patient once they have returned home if they 

have a complication or if they are unhappy with their results? Do 

they fly back to the site where they had their procedure? This is 

not likely in many cases. 

Do they have insurance coverage for complications resulting from 

elective procedures overseas? Patients should be aware that their 

insurance company likely will not cover complications for their procedure, a fact that we have learned from elective cosmetic procedures. 

Surgical training and credentials as well as facility standards 

may not be verifiable in all cases. In order for cosmetic surgery to 

be performed safely, it requires the proper administration of anesthesia, sterile technique, the latest instrumentation and equipment, as well as properly trained surgeons. 

Patients need to ask a lot of questions and may not be able to 

get the answers. 

Is the practitioner providing the medical procedure appropriately 

certified? For instance, in some cases we have become aware of, a 

physician with training and credentials in internal medicine 

should probably not be performing surgical operations like 

abdominoplasty, face lift, breast augmentation or breast reconstruction. In the U.S., the American Board of Medical Specialties provides the gold standard for verification and training. 

For some developing third-world countries, there are no credible 

processes for verifying physician training, education and experience. Further, there are no U.S. laws that protect patients or mandate the training and qualifications by physicians or the facilities 

in which they practice. There may be no legal recourse for surgical 

negligence by the physician or the facility. 

An important question to ask is whether the facility is accredited 

or licensed. In the U.S., there are rigorous rules. 

Although there may be many skilled and qualified physicians 

practicing all over the world in outstanding surgical facilities, 

ASPS cautions patients to consider these critically important patient safety issues before making a decision based solely on price. 

Patients should have all the information they need to make a truly 

informed decision and one with their best health in mind. 

So we hope that this discussion is helpful to the committee in 

considering this important issue. We commend you and the other 

committee members very soundly for initiating this very interesting discussion, which will hopefully lead to a greater awareness 

on the part of the public. 

Thank you. 

[The prepared statement of Dr. Cunningham follows:]

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The CHAIRMAN. Well, Dr. Cunningham, you make some very important points, and we value those. 

I am wondering, do you ever—now, as I understand it, the American Society of Plastic Surgeons, you are the board, you are the one 

that certifies the competence of a physician. 

Dr. CUNNINGHAM. We only accept board-certified plastic surgeons 

as members. 

The CHAIRMAN. In your association. 

Dr. CUNNINGHAM. It is the board, which is one of the 24 American Board of Medical Specialty Board, which actually certifies 

throughout the country. 

One of the issues we have, even in this country, is that there are 

boards that aren’t AKC-registered boards, if you will. A member of 

the public cannot determine from the colorful language written in 

Latin on the diploma on the wall whether this is a real certification 

or not. 

Perhaps in these smaller pilot programs, very highly licensed 

and credentialled organizations and surgeons are being used. But 

as the profit spreads through this nascent industry, there will be 

much greater temptation for less-qualified partners. How will we 

verify that? 

The CHAIRMAN. Does the board certify plastic surgeons who later 

go and practice in places like India? 

Dr. CUNNINGHAM. We certainly certify plastic surgeons who go on 

volunteer missions throughout the world. I would imagine, with respect to the issues of licensure, an American-trained plastic surgeon could receive licensure in India or any European——

The CHAIRMAN. So that doesn’t disqualify them, moving and 

practicing in another country? 

Dr. CUNNINGHAM. Absolutely not, not at all. 

The CHAIRMAN. That is a very, very good point. 

Mr. Rao, do you have board-certified surgeons, plastic surgeons? 

Mr. RAO. Absolutely. 

I think Dr. Cunningham brings up some excellent points in 

terms of why the public needs to be aware of the quality issue and 

the safety issue. That is one of the reasons we have taken express 

steps to assure that in all aspects of our relationships with our providers we are dealing only with the best of the best. We don’t allow 

for any kind of lapses in terms of quality at any given point. 

But, yes, indeed, many of the physicians are indeed U.S. boardcertified. They have, in fact, gone back to India and helped raise 

the bar over there, which is an important aspect of why it has become more attractive in recent years. 

The CHAIRMAN. I imagine you recognize the value for American 

patients of having American certification from the different boards 

that provide this assurance, quality assurance. I assume that that 

is the case if America is your niche. 

Mr. RAO. Absolutely. That is why I think the Joint Commission 

has played an important role in making sure, at least at all touch 

points with the patient, that the hospitals have processes in place 

that match, if not exceed, you know, the average hospitals here. 

The CHAIRMAN. Dr. Cunningham made a very good point about 

the value of a relationship with a patient and knowing them. Do 

you do teleconferencing before a patient ever goes to India? Do you 

51

ever have a teleconference where they know who is going to be 

doing the surgery and it is discussed with them? 

Mr. RAO. Absolutely. That is one of the things that some of the 

patients like to do, is be able to talk to their doctor via teleconference and make sure they are comfortable with who they are working with——

The CHAIRMAN. OK. 

Mr. RAO [continuing]. What their credentials are. 

The CHAIRMAN. Mr. Milstein, are those the kind of things that 

you advise Fortune 500 companies to insist upon as they consider 

some of the medical tourism? 

Dr. MILSTEIN. Yes, that is part of our due diligence process, 

verifying the hospital is, for example, Joint Commission-accredited 

and that the physicians performing the procedures can indeed document board-certification status in an advanced country. 

The CHAIRMAN. Bonnie, does the union member ask those questions? I mean, Dr. Cunningham makes a really good point. We 

don’t know what to ask. I mean, half of it is written in Latin up 

there on the——

Ms. BLACKLEY. Oh, they certainly do. I think that they are very 

savvy medical customers, much more so than you would think. 

What has been the length of time that you have spent with your 

doctor at your last physician’s visit? 

The CHAIRMAN. Your point is that that hasn’t been so great either? 

Ms. BLACKLEY. I think the normal visit is from 4 to 6 minutes. 

You probably waited for a couple hours before then. 

Why is alternative care so popular and billions and billions being 

spent? People are searching. Even in my family, I went 

misdiagnosed for several years—so did my daughter—and had severe ramifications because of not being diagnosed correctly. 

I have story after story after story from my employees on the 

poor quality of treatment that they have received, either no diagnosis or a misdiagnosis. We really have a crisis in this country. We 

are not getting quality health care. Yet it is unaffordable. 

We are searching. We are looking in other areas. We have got to 

work with providers and hospitals here to make our system better. 

We have tried to do that at Blue Ridge Paper Products. We met 

with a medical practice across the street from the mill before we 

put in our medical center. The first thing they told us when we 

walked in the door was, ‘‘Don’t ask us to discount our prices any 

more. Oh, by the way, we have got a problem with your onsite diabetes program.’’ We worked with six other large employers in western North Carolina to try to work with our local hospital on a better discount. At least give us the same discount as you give the 

large carriers that are in that region. They told us if our utilization 

did not remain where it was, they would even take away that discount. 

We have done a lot to try to work locally with our providers, to 

no avail. They don’t have to work with us. They will readily admit 

that they do cost-shifting and that they don’t have the answer. I 

had one physician tell me, ‘‘Well, if it is a death spiral, then I am 

going to make all the money I can while I can.’’ We need our system here in the United States to wake up. We need it to become 

52

better. We need to work as a team. If the carriers and the providers, the employers and the employees can all work together—we 

have tried that approach. It has not worked in our community. 

The CHAIRMAN. Dr. Cunningham, obviously your association is 

aware of this new and apparently growing competition. Is that the 

case? 

Dr. CUNNINGHAM. Certainly, we are aware of it. We have seen 

it for many years with patients, again, opting for better price and 

going to Mexico, going to Costa Rica and elsewhere, Brazil, to get 

cosmetic surgery. 

Frankly, the risk/patient-safety side of it is becoming a global 

problem, just as the world is flattening, and we have heard that 

part of it discussed today. 

This issue of people from Germany leaving a higher-cost, higherprovider network and going to, say, emerging Russian republics, 

Turkey and other countries, where the standards, as I have said, 

just cannot be verified to have this kind of surgery, and then coming back to Germany, to France, and being a burden on that 

health-care system. 

I am touched by the economics of it. I am touched by the stories 

that we have heard today. We clearly need to change the system. 

I agree with Dr. Milstein. This is a symptom, not a solution. 

A hundred and fifty thousand patients going to India hardly 

touches the surface of the problem we meet here. But, you know, 

on the other hand, these people are coming back. They are presenting a burden for our health-care system. They are prevailing 

on the goodwill of everyone to take care of them, and that is probably not fair either. 

The CHAIRMAN. I understand, Doctor, that ironically your segment of medicine, plastic surgery, really does not have an insurance overlay. It is really fee-for-service all the time, isn’t it? I don’t 

know of many insurance policies that cover plastic surgery. 

Dr. CUNNINGHAM. Well, plastic surgery has two major components: the cosmetic part, in which case, you are absolutely right. 

The CHAIRMAN. I should clarify. I mean cosmetic. 

Dr. CUNNINGHAM. Then the reconstructive part——

The CHAIRMAN. Reconstructive is usually related to cancer and 

things like that——

Dr. CUNNINGHAM. Right. 

The CHAIRMAN [continuing]. It would include those. 

Dr. CUNNINGHAM. In the reconstructive part, we are in the same 

boat. You know, we are finding it is harder to provide services for 

our patients because frequently they are denied coverage or their 

coverage is marginal, and they have to make difficult decisions 

about whether to have a breast reconstruction. 

I mean, we recognize clearly that the problem is in the system 

and that it is a system problem that needs to be dealt with on a 

system level. 

The CHAIRMAN. We have all seen these T.V. programs of horror 

stories of plastic surgery outcomes, of people who are addicted to 

having plastic surgery. 

I wonder, Mr. Rao, do you see people coming over with that addiction? Do you stop and tell them, ‘‘There is enough here already; 

stop’’? 

53

Mr. RAO. We do. We tend to, you know, be conservative and err 

on the side of trying to make sure that we don’t have people that 

are going there, that basically shouldn’t be going there, such that 

it could be almost risky for them. 

But another very important point is, that fundamentally we are 

facing a situation where, to whatever degree medical tourism 

grows, it is never going to create the level of competition that physicians and hospitals here will ever have to worry about. 

Because, as it is, we know that the providers are busy today, and 

they are going to get busier because we are all growing older and 

we are all relying more on the system to take care of our needs. 

The number of doctors entering into the system is shrinking. It is 

not growing proportionately. 

So given that, I don’t believe we will ever run into a situation 

where everyone just chooses to go. It is always going to be a smaller percentage of folks that will go. Those that have needs that have 

emerged to the point where they have no other options will go. 

So, in essence, it will be a healthy form of competition that gets 

introduced into the system and not one that basically goes out of 

control. 

I do agree with the fact that there may be some unscrupulous 

operators that come in and start lowering the bar. But we, as an 

organization, take it as our responsibility to make sure that anyone 

that comes through us is not going to face any such circumstance. 

Because the doctors themselves are very, very risk-averse. We 

are finding that in cases where we feel something might be acceptable, the doctors in many cases have pushed back and said no. 

So that is a very good sign, because they are saying, ‘‘We don’t 

want to take chances with this. You know, our reputations are on 

the line. Our hospitals’ brands are on the line. We don’t want to 

take any chances.’’ 

So it is going to be self-governing from that standpoint. But that 

doesn’t mean that we don’t need regulation to look closely at how 

this trend evolves. 

The CHAIRMAN. Well, let me conclude this hearing with just an 

expression of real appreciation for the contribution each of you 

have made here. 

This is a very important topic. You should know that, thanks to 

C-SPAN, there are many people watching you today. A large number of seniors follow the work of this committee. You have added 

measurably to their understanding and their options. 

We also want to say how glad we are that Howard Staab had 

such a great outcome and that he is here and healthy. 

We thank you, Maggi, for your testimony here today, as well. 

All the best. Have a great afternoon. Try to stay dry. We are adjourned. 

[Whereupon, at 11:35 a.m., the committee was adjourned.] 

(55)

A P P E N D I X 

PREPARED STATEMENT OF SENATOR HERB KOHL

Thank you, Mr. Chairman, for holding today’s hearing. We welcome all of our witnesses and look forward to their testimony. 

‘‘Medical tourism’’—or the practice of traveling to other countries to receive discounted medical procedures—is taking off in the United States, raising a number 

of questions for this panel. What is driving health care costs to such a height that 

Americans are seeking care overseas? How has the crisis of the uninsured in this 

country reached such a peak that some find foreign travel for medical procedures 

more practical than health insurance? Finally, how are we protecting Americans 

who do travel overseas from fraud, incompetent providers and most importantly 

poor health outcomes? 

The United States accounts for $1.7 trillion of the $3.3 trillion spent annually for 

health care worldwide yet ranks 37th worldwide in quality of care. Even more unsettling: there are 45 million Americans without any form of health insurance. As 

we hear from our witnesses today about Americans who have chosen to escape our 

health care system, we are also reminded of the how much we have left to do to 

provide every American with affordable, quality health care here at home. 

I look forward to hearing from our panel on both the benefits and risks of medical 

tourism. Again, thank you, Mr. Chairman, for holding this important hearing. 

PREPARED STATEMENT OF SENATOR KEN SALAZAR

Chairman Smith and Ranking Member Kohl, thank you for organizing yet another hearing on an emerging phenomenon: medical tourism. 

It is clear that the emerging industry of medical tourism not only impacts America’s seniors but thousands of others who travel abroad to obtain both elective and 

non-elective surgery. It also impacts the families of these patients, their American 

doctors (if they have access to regular medical care), and the U.S. health care and 

health insurance industry. 

I find this topic both fascinating and disconcerting. 

I am pleased that the quality of care in places like India, Thailand, and Malaysia 

has evolved so that Americans feel comfortable going under the knife for complicated surgeries like bypass surgery or more routine surgeries like knee surgery. 

However, I also believe that we must examine the root cause of this phenomenon: 

the rising cost of health care and frequent unavailability of affordable health insurance. 

I have introduced legislation with Senator John McCain, the National Commission on Health Care Act (S. 2007), which will undertake a fresh review of health 

care in the U.S. with one goal: implementing the best ideas to provide real solutions 

for the millions of Americans trapped in this Nation’s health care crisis. 

While medical tourism may be included in the discussions of the Commission, I 

believe there are additional policies that we can implement that are not as drastic 

as encouraging individuals to travel across oceans for a hip replacement. 

Today, over 46 million Americans, including over 766,590 or 19% of Coloradans, 

lack health insurance. Despite this, the cost of health care is rising—pricing out 

more and more Americans. By 2015, we are expected to spend $1 of every $5 of our 

GDP on health care. 

Of course, not all of the 46 million are able to catch a flight to Delhi or Bangkok 

for medical care. That said, I do realize that our health care crisis has caused thousands of middle class Americans, who cannot afford health insurance and do not 

qualify for Medicaid and Medicare can, to travel abroad. 

I am very interested in hearing from our first panel—Mr. Howard Staab and Magi 

Grace—about they came to travel to India for cardiac surgery. 

56

In this week’s Time Magazine, the cover story ‘‘India Inc.’’ illustrates the intensity 

of the growing medical tourism industry, by documenting the growing number of 

medical schools and hospitals that have popped up in the last decade. 

It has led to a dramatic transformation of mid-sized cities like Mangalore, India, 

where the medical schools number five, and there are at least four dental schools 

and 14 physiotherapy colleges. 

These new hospitals are fueling an industry that is expected to be at least a $2 

billion annual industry by 2012. Today, according to the best statistics available to 

us today, over 100,000 foreign patients traveled to India in 2005 up for just 10,000 

in 2000. These may not all be Americans, but we have every reason to believe that 

Americans are a significant percentage of this number. 

In the West, a country that is closer in proximity—Mexico—provides Americans 

retirees, including Coloradans, with access to access to inexpensive cosmetic and 

dental procedures. 

What does this mean to our health care industry? What steps are we taking to 

ensure that Americans are protected and accessing high-quality care? How is the 

health insurance responding to this growing trend? 

I hope that the panelist on our second panel will help us reveal answers to these 

questions. Most importantly, I hope we can better determine if medical tourism can 

help us in solving the root cause of our health care crisis: the rising costs of health 

care. 

Again, thank you Chairman Smith and Ranking Member Kohl for holding this 

hearing.

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