Medical Tourism At Home: Big Companies Start to Shop at Hospitals Across the U.S.

Last Updated Aug 5, 2010 9:34 AM EDT

Frustrated by health costs that continue to skyrocket, big employers are finally starting to send employees who need expensive procedures to wherever they can get the highest-quality, most cost-effective care. And while medical tourism abroad continues to grow, U.S. companies are increasingly looking at American hospitals that offer them and their workers a better bang for the buck, even after figuring in travel expenses. It's unclear how much impact this small but growing trend will have on overall health costs; but it should certainly get the attention of hospitals if enough companies move in this direction.

Among the latest firms to adopt this approach is Lowe's Home Improvement, which will send its U.S. employees to the Cleveland Clinic for cardiac procedures, including open-heart operations, valve replacements, and pacemakers. Lowe's negotiated a three-year flat rate for these procedures. It won't pay extra for readmissions, but will pay more if a patient has complex medical problems. Lowe's may also send employees to out of area hospitals for orthopedic procedures.

Lowe's decision is a major breakthrough for travel surgery, considering that it has 1,700 stores in the U.S., Canada and Mexico, and employs 238,000 people. But it's not the only company doing this. Alpha Coal West is sending its Wyoming employees to an ambulatory surgery center in Colorado for knee replacements, and to other facilities in Billings, Mont., Rochester, Minn., and Houston for orthopedic, cancer, and other kinds of care. And BridgeHealth Medical, a firm based in Greenwood, Colo., offers flat surgical case rates at 20 hospitals around the country to small and medium-sized employers that want to save money, according to an excellent report by Julie Appleby of Kaiser Health News.
The lure of out of area hospitals and surgery centers is not just low cost. Some of them also offer very high-quality care, lessening the chances that a worker will need to have their surgery redone or that it will lead to expensive complications.

Insurers and employers have long offered all-expenses-paid trips to "centers of excellence" for organ transplants and other very complex procedures. Many hospitals have seized on the term's cachet to proclaim themselves as centers of excellence. And some well-known institutions, such as Cleveland Clinic, Mayo Clinic, and the M.D. Anderson Cancer Center, have marketed their excellence nationally. But only recently have major employers begun to send employees to distant cities to save money on common procedures.

How much can they save? Well, Lowe's had benefits consultant Mercer & Co. do a study of one employee who had three cardiac procedures under its new program. The surgeries cost Lowe's a total of $469,000, including travel and hotel expenses, and Mercer concluded that they would have cost $531,000 if they'd be done under Lowe's regular insurance plan.

Interestingly, the insurance companies that administer Lowe's health coverage were said to be reluctant to find out how much the home improvement firm could save if it sent patients to hospitals outside the area. The reason is obvious: The plans fear angering local providers who would be hurt by such a program. However, WellPoint has begun investigating medical tourism in foreign countries.

One consultant who specializes in medical tourism, Anthony Cirillo, suggests that there are some lessons hospitals can take from this development: First, don't try to be all things to all people. Don't assume that baby boomers won't travel out of area for healthcare. And learn how to market to people in other parts of the country so that they will use your hospital.

Sage advice at a time when all received wisdom seems to be crumbling.

Image supplied courtesy of Picasa Web Albums.

Related:
  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.

Comments

Market Data

Market News

Stock Watchlist