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WellPoint Jump-Starts Medical Tourism Trend

Healthcare providers and insurance companies have long been at odds over reimbursement, coverage, and pre-authorization issues. Now, it appears, physicians and hospitals may soon have another bone to pick with health plans, over medical tourism.

Wellpoint, the largest U.S. health insurer, is conducting a pilot of medical tourism with Serigraph, a specialty graphics company with operations in Wisconsin, Mexico, and Asia. Serigraph employees have the option to travel to India for non-emergency surgery. Paul McBride, vice president of health care management and services for WellPoint, says that it makes sense to do these procedures in India, where the cost is 80 percent lower and the quality is just as good as in the U.S. WellPoint, which would like to expand its test, is focusing on cardiac and joint-replacement operations that require a two-week hospital stay.

Other health plans are also slowly beginning to cover medical tourism. Blue Cross Blue Shield of South Carolina, for instance, has created an international network of doctors and hospitals covering Thailand, Costa Rica, Ireland, Turkey and other countries. A number of self-insured companies are also letting their employees seek care abroad.

The AMA, which last year approved guidelines for U.S. residents who travel abroad for medical care, estimates that about 150,000 people did so in 2006. The Deloitte Center for Health Solutions estimates that this number will increase to 16 million over the next decade. That could cost physicians and hospitals billions of dollars in lost revenues.

American providers aren't taking this lying down. There has recently been an upsurge of what's called "domestic medical tourism." Some hospitals are offering big discounts to patients who are willing to pay for procedures in cash. Surgery practices are trying to lure people from other parts of the country partly by advertising the local tourist attractions and also by offering cash discounts. And Orlando, FL, is trying to become a national destination for medical tourists. The city is promoting the construction of a "Medical City" complex tied to the new University of Central Florida Medical School. Healthcare organizations such as the Mayo Clinic, the Cleveland Clinic, and the M.D. Anderson Cancer Center have long attracted an international clientele, drawn by their reputation for excellence. But it remains to be seen how the average hospital or medical practice can compete with overseas providers that charge 80 percent less than they do.