Imagine we have an umbrella – we will call it medical tourism. And underneath that umbrella there are a few synergistic industries and partners, namely voluntary benefits, self-funding, global benefits, healthcare reform and corporate wellness. What’s happening all around them? Well, it’s a little stormy, that is, the winds of rising healthcare and insurance costs and the challenges of providing affordable care are moving in.
But in a storm that’s shaking things up, an umbrella like medical tourism makes the tempest a bit more tolerable, and this is one of the reasons that this year we had an integration of the MTA’s annual congress with the Global Benefits Conference and the Employer Healthcare Congress. Medical tourism provides options and alternatives for these synergistic industries.
The potential financial impact of such a storm can be somewhat mitigated by the canopy of medical tourism. Not only can it provide an alternative way to satisfy patients in this rough climate, but it could also offer serious cost savings to employers, benefit plans and insurers.
The Intersection of Health Care
“It [health care reform] is going to inspire physicians, health systems and hospitals to look at alternative ways of delivering their medical product,” said Nick Christos, Chief Marketing Officer of Elite Underwriting Insurance (one of the largest providers of reinsurance and stop loss to self funded employers, in a interview with the Medical Tourism AssociationTM (MTA).
“It is not just the self-funded health care plans that are going to be affected, and it’s not just limited medical. It’s a more global issue,” says Christos.
As we know, the medical tourism industry is vast, with many key players who have varied and specific interests in health care. Thus, incorporating the three “partner industries” under our medical tourism umbrella will generate individual concerns when it comes to considering the incorporation of medical tourism.
Self-Insured Medical Travel
In the case of self-funding – where the employer of an organization assumes the financial risk for providing health care benefits to its employees – medical tourism helps buttress the objective of cost savings to be incurred by an employer instead of an insurance carrier.
Self-funding or self-insuring means that instead of obtaining company medical coverage from an insurance carrier (such as BCBS or Aetna), an employer chooses a plan of benefits and then claims liability in the risk of medical claims up to a certain level, which is when a reinsurance or stop loss insurance carrier assumes the responsibility.
Usually managed by a third party administrator (TPA), reinsurance or stop loss insurance (also known as specific or individual excess risk insurance) kicks in when the cost of a claim (or aggregate of claims) reaches a specific deductible.
In an exemplary fashion, let’s say we have a specific deductible of $100,000. For any person on the health care plan, the employer must first pay up to this limit and only when claims hit $100,000 will the reinsurer pay the remaining claims for the person that year.
Conversely, in a fully insured medical plan the employer pays, let’s say $1,000,000 to the insurance company for the year to cover all employee medical claims. If by the end of the year total claims only come to $500,000, then the insurance company will pocket the surfeit. Under a self-insured plan, however, the employer would have profited and would have saved $500,000.
So, where does medical tourism fit into this picture? Using our specific deductible example, if a person within the health plan needs a medical procedure, perhaps a coronary bypass that costs $100,000, then the employer must pay that expense since stop loss insurance would only kick in after claims hit $100,000.
On the other hand, if that employee elects to travel for his/her procedure and goes to India, for example, the cost of the same surgery at an equal or superior medical facility could be $10,000.
That’s a 90% cut in medical costs and $90,000 in savings.
Voluntary Benefits Overseas
Similarly, voluntary employee benefits – insurance products that an employee may choose to purchase through their companies at rates that are lower than they could get on their own – could also see cost savings through adopting medical tourism. Currently, as a result of the U.S. economic crisis, the switch from core benefits to voluntary benefits is a growing trend that is helping employers cut back on costs by allowing their employees to select which benefits they’d like to receive.
Some of the benefits the insurance industry is seeing a benefit in implementing medical tourism into are dental, vision, critical illness, cancer and limited medical. We have covered in the past how limited medical plans don’t cover major surgeries and therefore are a perfect fit for medical tourism.
Critical illness and cancer plans are also a perfect fit, paying out specified cash benefits upon the diagnosis of 10 critical illnesses or upon diagnosis of cancer. Many of these plans can pay out $10,000 or $20,000. In U.S., Canada and similar developed countries this payment will only cover a fraction of the benefit, but if you allow the patient to take the benefit overseas it could cover the entire condition. We are seeing dental insurers start to build international networks in 2011 and it will continue into 2012.
In most cases, 100 percent of benefits are paid by the employee. By making the employee aware of medical tourism as an option, the patient could take the payout from the insurance company and go overseas and get more bang for their buck.
The next arena where medical tourism could make an impression is in corporate wellness. Nowadays, work for many has become their second home – a home where employees often undergo stress and pressure. Corporate wellness is a strategy that has been adopted by many businesses as a way to cater to an employee’s health needs with facilities, programs and lifestyle initiatives that aim to create a healthier employee who will in turn be a better performer – a mutual benefit for the individual and the company.
Wellness programs often include fitness centers in the office, provision of preventive medicine such as the flu shot and healthier foods at the office cafeterias and food courts, in addition to other wellness measures.
“A successful program has the ability to motivate its employees, gather teams, personalize its programmatic and fitness offerings, lead employees to discover their “why,” and communicate their wellness message frequently and effectively,” said Pete Thomas, motivational speaker and season two winner of NBC’s “The Biggest Loser” at the 2011 Congress. Now a corporate wellness consultant, Thomas helps companies increase participation in wellness programs:
“Ultimately, a successful corporate wellness program helps employees make life-long lifestyle changes that result in healthier, happier employees, and a more productive workplace,” he said. While worksite wellness often includes medical, nutritional and fitness campaigns, global wellness developments such as spa services offer a unique solution to ameliorating workplace stress.
In businesses that incorporate corporate wellness, part of the focus is preventing health issues before they start. Encouraging employees to exercise and get regular health check-ups are some preventative measures that some companies take.
Medical tourism can play a role in keeping the employee healthy. For example, Johns Hopkins and PepsiCo recently signed a deal that PepsiCo’s self-funded medical plan will now waive deductibles and coinsurance for employees and dependents that elect to have cardiac or complex joint replacement surgery performed at John’s Hopkins Medicine in Baltimore.
In this case they are saving money, but also sending their employees to a more high quality hospital where they will receive the best care hoping to result in a speedy recovery. Employees with these health conditions will now go to the doctor, have surgery and stop coming to work in pain – increasing the level of productivity and return to work faster.
Many employers are very concerned about employee productivity and having an employee return to work sooner is a very big priority. Sending an employee to receive the highest quality of care, helps employees return to work sooner, because they will have better outcomes and less complications, enabling them to return to work sooner than employees traveling to hospitals with lower quality outcomes.
Global Benefits, which is the industry for multinational employers and insurers, plays a very large role and future in the medical tourism industry. Global employers and insurers already understand the quality of healthcare overseas and don’t need to be educated on it.
They will be the first to allow medical tourism in their plans as they already have global networks; it’s just a matter of flipping the switch on incentives. During a Global benefits roundtable at the conference we saw how medical tourism already plays a big role in Global benefits.
One of the largest global employers addresses the issue of having employees from around the world with catastrophic health conditions and having the problem of trying to “source” where to send employees from different countries for specific high quality surgeries and at the MTA event how medical tourism can help her organization with these issues.
Integration and Partnership
The common theme throughout these separate industries is they are not so separate after all. Each feeds and provides a benefit and fills a gap. These industries are at a crossroads and medical tourism is at the center of it, all we need is a better platform for communication to bring the players in these industries together. This is what we started this year and which we will continue working on in 2012 for the MTA’s 5th annual congress.
As medical tourism underlines a pursuit of worldwide collaboration for the advancement of global health care, the individual and specific concerns of groups, insurers, employers, governments, etc. necessitates cooperation between all of the various key players.
Likewise, with commonalities such as the global effect of health care reform and the incorporation of medical tourism, new challenges and alternative options create a newly collaborative foundation whereby the business of health care can advance forward in its shifting and ever-changing direction.
In addition, while health care reform will have various impacts on different key stakeholders on the health care playing field, what we could see at the business level is a further reduction of costs through medical tourism.
No one really knows how healthcare reform is going to affect healthcare or insurance globally or in the U.S. Some employers are responding to growing health care costs by dropping their employee’s health insurance. Employers could provide coverage to their employees and reduce their costs with alternatives such as medical tourism.
Collaboration and cooperation between health care industry stakeholders is part of the strategy for effecting the advancement of global health care. At the end of the day, it’s better for change – it’s better for business.
About The Author
Renee-Marie Stephano is the President of the Medical Tourism Association™. Ms. Stephano is also the Editor-in-Chief of the Medical Tourism Magazine, Health Tourism Magazine and Healthcare Development Magazine. Having a background in international marketing and relations, health law and litigation, she provides a valuable service to the Medical Tourism Association™ in these fields. She may be reached at Renee@MedicalTourismAssociation.com.