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Economics & Investments

Medical Tourism ~ An Economic Boost to the United States

Economics & Investments

The current economic crisis is affecting U.S. hospitals on many different fronts, from a reduction in patient volumes to an increase in debt, producing a negative financial effect. According to Moody’s Investors Service, last year not-for-profit hospitals received 27 credit upgrades versus 53 credit downgrades – the largest number of downgrades since 2001.

The rise in unemployment has placed strain upon the already delicate situation of uninsured patients. From December 2008 to March 2009, more than 2.7 million people lost their jobs, bringing the total of unemployed to 5.3 million in the last 12 months.

As a direct consequence of job loss, people are no longer covered by employers’ health plans nor have the financial means to purchase individual health insurance. It is estimated that the number of uninsured has increased by 3.7 million in the last year alone, surpassing more than 50 million, or 16.7 percent of the total U.S. population.

The Impact on Hospitals

Uninsured patients delay elective medical care and therefore misuse emergency rooms, which are costlier to operate. In addition, these patients are unable to pay for care or are covered by Medicaid or other public programs designed for low income populations, increasing the financial burden on hospitals.

A survey conducted in March 2009 by the American Hospital Association reported that 58 percent of hospitals have seen an increase in emergency department visits. It also reported a 70 percent raise in uncompensated care as percent of total gross revenues. During the calendar year 2009, US hospitals will have lower revenues due to a shift from private payers to Medicaid for elective admissions and procedures, and higher debt as a result of increased uncompensated and charity care.

Medical Tourism ~ Ensuring an Economic Boost

Medical tourism represents an opportunity for U.S. hospitals to diversify revenue – usually hospitals with dedicated international centers generate five to ten percent of total revenue from international patients. Inbound medical tourism to the U.S. is approximately $5 billion or 400,000 patients annually, according to the Deloitte Center for Health Solutions.

Patients come mainly from Latin America, the Caribbean, Europe and the Middle East. Many are cash paying patients, usually wealthy people traveling to the U.S. looking for high tech care, but the largest medical tourism group consists of patients with international insurance policies. These policies cover most medical expenses, leaving patients with the normal co-payments and deductibles. In addition, hospitals benefit financially from international insurance policies because reimbursement rates from these commercial payers are usually higher than government sponsored plans.

These international policies, along with strategic relationships with international insurance companies, third party administrators and cost containment companies, boost revenues and contribute positively to the bottom line of US hospitals.

The Three Reasons Patients Travel to Other Countries for Medical Services

  • Perception ~ A patient may judge the hospitals in a particular country to have better quality and/or a faster response to their needs.
  • Affluence ~ A patient may have insurance or the financial means to cover medical care, lodging, transportation and other expenses related to traveling abroad.
  • Technology ~ Current or relevant medical technology may not be available in a patient’s country of origin.

Catering to Tourism

International patients require a portfolio of logistic services while traveling abroad for medical care. Hospitals must have well-trained personnel to assist with visas, hotels, transportation and translation services. They should also provide timely access to physicians during scheduling appointments and procedures. Also, travelers on vacation or business can get injured or sick, requiring emergency services.

For example, the University of Miami Health System provides medical care to numerous patients in need of emergency evacuations while traveling to the Caribbean.U.S. hospitals are well positioned to manage complex chronic medical conditions while providing excellent customer service and international departments play a critical role in coordinating concierge, medical and financial services for international patients.

Seven Aspects for Hospital Administrations to Consider When Building an International Program

In meeting the complex medical needs of international patients, hospitals should be part of a complete health system and provide services in the full spectrum of specialties and sub-specialties. Coordination between facilities and physicians within the same organization facilitates clinical management.

Going beyond patients. To foster patient referrals, it is important to build relationships with physicians, hospitals and other healthcare organizations overseas. Collaborative efforts in education, training, research and consulting initiatives assist in improving healthcare in their countries while ensuring referral of complex cases.

Multicultural Environment.  Personnel working in the international department should be multilingual and multicultural to facilitate addressing differences of language, religion and social custom between patients from regions around the world.

Pricing. Think strategically about pricing when dealing with payers; link discounts to volume and timely payments. Be reasonable to self-pay patients – payment in advance will avoid revenue cycle hassles.

Customer experience. Experience is not only about clinical outcome – international patients are looking for outstanding customer service and rank hospitals accordingly. Create “the experience” in every encounter at the hospital, with the physician and the staff. Even the city should have a welcoming setting.

Make international patients an organizational priority. Hospital staff and physicians should be flexible in providing appointments, scheduling procedures and facilitating care in general.

Setting foot overseas.  Explore opportunities to expand your brand and facilities overseas to take advantage of inbound and outbound medical tourism.

Globalization and its impact on migration to urban settings and modern lifestyles are shifting the focus of healthcare from infections and nutritional diseases to complex medical conditions such as cancer, trauma, diabetes and cardiovascular problems. The current economic environment is an excellent opportunity to look beyond geographical borders for growth: successful U.S. hospitals of the future will be required to be global players.

Jose Quesada, MD MBA, is the Director of Finance and Operations for UHealth International at the University of Miami Health System and School of Medicine.  He received his Medical Degree from Carabobo University and a Master of Business Administration from IESA Venezuela.  He has held several positions with health care providers in USA, Latin America and the Middle East. He has extensive experience in hospital operations, revenue cycle management and financial planning. Dr. Quesada can be reached at

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