Cross-border commerce is generally considered a good thing, and sufficiently established enough that parties who engage would have ready-made, easy-to-follow rules. The truth is that financial arrangements for payment of services rendered can be fraught with land mines that remain well-hidden far into the relationship, leading to a frustrating, exhausting and expensive collection process.
To successfully navigate the foreign exchange of international finances start with the basic tenets of successful business. And I’m not talking about textbook principles. I’m talking about common-sense principles.
Three Common-Sense Principles of Cross-Border Commerce
- Never engage in business unless a relationship with all parties is well-established. You:
- Were referred to the parties by a trusted person.
- Have researched the parties and are comfortable with your findings. Have “tested” the relationship and are comfortable with the results.
- Always demand a deposit.
- Sometimes, this is not enough.
- Find out about business practices in the countries involved and emulate their processes. o Heed warning signs.
- Involve a reputable third party in the countries involved.
- Government can assist with the process and is usually reputable, especially if the reputation of the country is at stake.
Common sense applies to business also. Always make sure that you have been introduced to the parties by other reputable parties, have taken time to know them and are comfortable that they are who they say they are. More importantly, you should be comfortable that they can do what they say they can do; in other words, they don’t make empty promises.
When the time comes for business to be transacted, make sure your contract calls for a deposit. Not only will this ensure that you get at least partial payment for your efforts, but this will also demonstrate good faith by the paying party.
I always try to find someone in the country whom the party I’m doing business with, resides. This should be someone in government, on the board of management or board of directors of a major hospital or association, or a reputable business person who can help exert pressure if or when the time comes to do so.
Additional Helpful Principles
In addition to the basic principles, make sure that the following checklist is consulted.
And I’m not talking about textbook principles. I’m talking about common sense principles.
- Contract is enforceable and clearly indicates which jurisdiction will be called on to enforce the contract if the need arises.
- Your attorney reviews the contract prior to execution.
- Payment of attorney fees, in the event of a dispute, is clearly identified.
- Client has a domestic financial institution from which payments will be made.
- Payment guarantees and responsibilities are clearly identified in the contract.
- Records of ALL communication during contract and other business negotiations and dealings are maintained.
Admittedly, in spite of dotting all “I’s” and crossing “Ts,” relationships can still go sideways for a number of reasons; many of which are completely unforeseeable. For example:
Case Study Scenario
A reputable facilitator, representing half-a-dozen high quality hospitals in the host country, is actively seeking to market their services to countries from which they hope to generate patients. The facilitator has worked with the hospitals for more than a dozen years and they have successfully penetrated numerous national markets around the world.
They have built up a tremendous amount of trust with each other and enjoy the mutual success that their relationship has brought through the years. In fact, the respective international patient department managers have conducted joint marketing ventures and visits to the country.
They have made presentations with the facilitator and been introduced to the country’s healthcare professionals. This is particularly important because all parties are sharing the cost of marketing. The relationship is very strong between the facilitator and the hospitals.
An opportunity arises in a country that has great promise to send patients to the facilitator’s network of hospitals. The facilitator conducts an investigative trip to assess the opportunity.
The trip is very successful and the facilitator feels comfortable taking the next step, which is to introduce the hospital network’s international patient departments to the country. The facilitator engages a local marketing company in the country of opportunity to set up a meet-and-greet, complete with press coverage and government involvement.
The meeting is a hit. Key government spokespersons address the 30-plus in the audience. The meeting was held at a government-owned hospital and included just about every local executive, spokesperson and representative of the country’s healthcare system.
On the evening news, the local marketing company, the key government spokesperson and the facilitator are highlighted, and the destination hospital representatives receive TV snippets. The relationships seem to be solid.
The local government spokesperson and another key regional healthcare executive also visited the destination country and are hosted by the facilitator and one of the hospitals. The visitors are very impressed with the hospital, and with their reception in the destination country.
They are convinced that the facilitator is a person who can make good on the contract responsibilities and that their patients will be attended to in a manner fitting their needs.
Shortly thereafter, the facilitator receives a request from the country of opportunity’s government spokesperson, requesting emergency attendance for three patients. After all the requisite steps are taken and patient records are reviewed by the attending physicians, the facilitator arranges for transport of the patients. Three key items must also be mentioned here.
- Included in the facilitator’s menu of services is that the facilitator covers the hospital fees and charges, and is reimbursed by the party responsible for the patients’ medical costs.
- The country and the facilitator have not signed a contract at this time.
3. The facilitator does NOT present the country with an estimate before accepting the patients.
Shortly after the first patients arrive, the country requests passage and treatment for a fourth patient. The facilitator happily obliges. At this point, the facilitator is confident that a new market has emerged, from which his business will prosper. The facilitator doesn’t anticipate any difficulties at this time.
Let’s fast-forward 60 days. Another trip has been made to pick up a fifth patient, and that also returned the original three patients to the country. The facilitator presents the country with the bill. Another 30 days elapses and the country has not responded. The facilitator is vaguely aware that the country has audited the invoice, but has not been directly contacted by the country.
Things get tense. Communication slows down and becomes intermittent, fueled by the country’s lack of response to payment inquiries and the facilitator’s lack of consistent follow-up. The facilitator is also busy with other clients and does not conduct a consistent communication campaign with the country.
The facilitator does solicit the counsel and aid of some of the country’s healthcare professionals and influencers. Finally, one of them is able to bridge the communication. The ensuing information is omitted due to its sensitive nature.
Eventually, the facilitator has to make another trip to collect partial payment from the government. The relationship is still intact between the facilitator and the country, but some things became apparent during the case-study period.
Dos and Don’ts in Medical Tourism Financial Transaction
Whereas all the principles aforementioned may have been followed diligently, and a relationship may have been developed, things can still go sideways. For some reason, anytime there is a relationship that involves an exchange of money, there is a high risk that things can get very tense at some point. Payment for, and rendering of services, creates a responsibility for each party to an agreement or contract. These responsibilities have to be spelled out in absolute detail.
- No amount of detail is too much.
- Get a Letter of Credit where possible.
- This is an acceptable method of international commerce that is very reliable.
- Bill the responsible party regularly; don’t let the amounts owed get too high.
- Make sure the billing process is in the contract or agreement.
- Insist on a conflict resolution process; arbitration is usually an inexpensive way to move closer to a resolution when parties disagree on the letter or intent of the contract.
Obviously, the issue of payments owed is complex and relies heavily not only on sound business principles and forethought, but also on meticulous execution of a contract, a relationship and steps to take when disagreements occur.
That medical tourism often involves inter-country, cross border financial arrangements makes the issue even more complex. I know countries that are grappling with the issue, and they have vast legal, financial and business resources at their disposal. Admittedly, patient travel adds a degree of complexity to both the healthcare and financial processes.
Even when nations address these issues at the highest government levels, with the involvement of their tourism, health, immigration and finance departments, somehow difficulties always seem to arise with non-payment of services rendered.
The recommendation is to always retain a consultant who not only has expertise in the two areas of inter-country commerce and healthcare, but who also has dealt with such issues. That experience will prove most invaluable. Insist on an in-depth risk assessment and the business solutions that the consultant recommends. At least you will be armed with the most efficient and effective tools to maintain a safe and prosperous relationship with clients and suppliers.
About the Author
Alex Piper is the president of OneWorld Global Healthcare Solutions, a consulting company committed to creating a worldwide healthcare solution. With more than 23 years of experience in insurance, marketing and employee benefits management, he possesses extensive knowledge of the global healthcare market and the influence that insurance carriers, employers, hospitals, physicians, healthcare professional organizations and government will have on the next generation.
As an insurance executive at a top Fortune 50 U.S. company, he spent eight years designing employee and customer benefits programs including healthcare programs for the large supplier and distribution partner companies of his employer. He was responsible for creating a benefits program that had more than U.S. $140 million in assets and 1,300 companies enrolled. His latest program grew to $40 million in insurance premiums in less than two years.