THIS WEEK IN MEDICAL TRAVEL TODAY

by Amanda Haar, Editor

Greetings,

Well, folks, it appears that medical travel has officially hit the world's radar.

In their recent list of top ten travel trends for 2010, USA Today included medical travel. Okay, so it's in position nine, but that's not the point. The point is that there now seems to be a general consumer awareness of the medical travel option. That's good news no matter how you look at it.

Interestingly enough, as consumers seem to be growing more comfortable with the idea of going abroad for care, some governments are making it harder to do so (See Red Tape story under INDUSTRY NEWS), and some health care facilities are fighting hard to keep consumers close. Better late than never, I suppose.

In this issue we have the third and final installment of Medical Travel Today's recent Roundtable Discussion on the impacts of health care reform on medical travel.

We'd like to thank the Roundtable participants for their time and insights.

If you have a topic you'd like to have discussed by thought leaders in the industry, please let us know.

Cheers,

Amanda Haar, Editor
ahaar@cpronline.com

Editor's Note: The following is the third and final part of the recent Roundtable Discussion hosted by Medical Travel Today on the impacts of health care reform on medical travel.

Moderated by Sam Havens, a member of the Board of Directors of BridgeHealth Medical and former Health Care Division president at Prudential, participants included:

Charles M. Cutler, M.D., consultant and former chief medical director for National Accounts at Aetna
Blair Gifford, associate professor of Health Administration and Management at the University of Colorado
Dale N. Lyman, senior vice president of Cost Management Strategies and Stop Loss Administration at Meritain Health
Cyndy Nayer, president and chief executive officer of the Center for Health Value Innovatio

(full participant bios are found at the end of the transcript)

SH: One thing, assuming that the public option does adopt the Medicare reimbursement rate, which we know is much less than most private companies pay, will this speed up the desire for the private insurers to try new options to be able to compete with the public option and will that be a positive to both domestic and international travel?

CN: Sam, I would see that as an absolute "yes." The public option is about creating competition in the marketplace. Consumers will have to look at where there are opportunities to save dollars, but there are again a couple corollaries to that. The first is that in this new model, health care becomes a commodity, which I find to be an interesting concept as I thought we were trying to get away from commoditizing health care… The second corollary is that while commoditization creates competition, how are we going to facilitate the rapid adoption and acceleration of it?

I see two ways to make that happen. The first is in the self-funded employer. The second is through companies that have a global presence. The more that they can showcase the ex-patriots that are getting good care around the world, the faster the marketplace can change. That was made very apparent to me when I held a private summit with the directors of our Center. One of the folks had been a medical officer for one of the branches of the armed services. He said something to the effect "Of course we do global travel, why wouldn’t we do global medical travel? We get it. We are global." And I went, "Ahh, there’s the market." Any company that has a global presence should be able to take that and run with that very quickly and dive into that commoditization if that’s what they need.

SH: I guess we would agree, whether it’s a public option or the existing Medicare system, it is highly unlikely that either of those systems would likely adapt to something like domestic or international travel as part of their benefit plan. The political force would make it impossible to do it, I would think. What do you think about that Blair?

BG: I think the whole notion of public option will push a lot more competition into the private plans, and it may limit the whole notion of medical travel in the sense that the prices will arguably come down due to greater competition. At least that’s what I think most people perceive might happen. Whether that actually plays out or not I don’t know, because once again no one is really sure what the public option really is.

SH: One aspect of health care reform that is apparently in the House bill, I don’t know how it’s going to end up, is limitation on the opportunities for consumer directed health plans. In other words, larger deductible plans, I guess, are not going to be "qualified" plans. This does not seem like a positive thing to me, what do you all think?

DL: I do agree with you. One of the ways to get people to travel is to incentivize their out-of-pocket. And if you limit that incentive it makes it more difficult to motivate them to accept something out of the norm, so I do think that will have an impact. If you’re looking at a price differential of, say, $2,500 I think that’s enough to motivate people to pursue the domestic travel. If it were bigger it would be a bigger motivator, but I still think $2,500 is enough to get people to take action.

SH: Any comment on that Cyndy?

CN: I agree with Dale, particularly if we look at demographics. For people with a lower income, a $2,500 high deductible is still a big piece of change. And for some that $2,500 is actually a per person cost, so you would have to achieve a $5,000 or $7,500 savings for the family in order to get motivated. I think it’s going to be an interesting thing to see how this all plays out.

SH: Chuck, do you have any comment about that?

CC: I generally agree with the previous comment, but it may make people develop more creative benefit designs so it would allow fair savings in other ways.

SH: Does the incentive really need to be to the member who’s using the service in order to get them to travel, whether it's domestic or international? I mean are we talking about $1K or are we talking about a lot more than that?

BG: Well, that’s a very interesting question. What’s a tipping point for individuals is something that has to be determined. And it will vary individual to individual. The U.S. is very ethnically and racially diverse, and many people are willing to travel back to Mexico or Costa Rica because they’re of Latin American heritage to begin with and other people are even starting to go back to eastern Europe because they’re Polish…they’re among family and friends already. I want to be careful about putting a price point in there because what drives them to travel really depends on the individual person. If someone has been in the States for generations, maybe the ethnic family thing doesn’t come into play as much and therefore we can look at a price plan.

SH: But you’re saying that the more ethnically diverse we have become in the last 10 or so years that’s actually positive for international travel?

BG: Oh, very much so. The amount of medical tourism that’s going on -- that is, people returning back to the Caribbean or the Latin American countries -- is phenomenal, and that isn’t necessarily driven by price.

SH: I spent some time about a year ago with one of the national consulting companies and their team. Among their younger associates, one was from India and one was from Costa Rica, and these young people who were probably in their younger 30’s. Both of them told stories to us that they have large numbers of their family in host countries and when they go to visit they get their dental care in either Costa Rica and India. And if they had to have a surgical procedure they would probably feel quite comfortable going there. That was dramatically different from my own experience. I thought it was quite interesting, so that sort of reinforces what you just said. Chuck, do you see this having an effect, on domestic and particularly on international travel, the changing demographics of the U.S.?

CC: I know that a number of large insurers talked about this, and that they see more people who are new to the U.S. or have strong family connections outside the U.S. who are interested and willing to go home for their care. And some of the insurers that already cover care outside the U.S. are looking at combining their global business with their domestic business for these members. It makes it easier to facilitate travel and take advantage of the relationships that they already have in other countries. I also agree with the comments that we heard earlier that the other factor is proximity. I know there have been a couple of large employers in particular that are interested in having networks in Mexico for those employees that live along the border.

SH: Texas and California.

CC: Exactly, the southwest border, and Aetna in fact has an arrangement with an IPA in Mexico specifically to serve the needs of the Hispanic population that goes back to Mexico for their care. I think we will see more of that. It’s too bad that Canada doesn’t accept patients for their excess capacity because that would be a wonderful market to use, and we’ve had inquires about that, but politically it’s not viable for them to open up their market.

SH: Does anyone have any other comments about any of our questions or anything anyone would like to add before we end?

CN: Sam, if I could just put one thing on the table, and that is that I really appreciate how these questions were formulated because it uses the term "medical travel." I think as long as we talk about "medical tourism" it will be perceived as fluffy. When it becomes medical travel, it becomes an important business opportunity.

SH: That’s a good point.

CC: I think the only thing I would add is that a lot of the medical travel so far has been for services that have not been routinely covered under health insurance, cosmetic surgery and dental are probably the major ones, and I guess some of the questions are, as we go forward, are there other things that will not be part of a basic benefit design? If so, the same factor will be in place that would stimulate medical travel or the flip side -- other things that will be included in more comprehensive benefit design that will therefore be easier to get in a more cost-effective way domestically. If people feel that they can get the basic part of their health care needs met, with a new health reform package it may also free up discretionary incomes so that more people will travel to get their dental care and cosmetic surgery. So I guess there are too many moving parts right now to figure out what the net effect will be, but I think there are a number of factors that can go either way.

BG: If I could add this, that health consumerism and the increasing globalization will continue to increase, whether the United States really gets active in this or not in terms of our consumers going abroad. I met some Brazilians who are involved with medical tourism and they said they don’t really target the United States. They are targeting South Americans and Africans. And, I just met with some Malaysian people involved with medical tourism, and they don’t really care if Americans come and get their procedures. They’re more interested in the Chinese and other people from South East Asia coming there. So whether medical tourism happens in the U.S. in the short term or not, it is happening internationally.

SH: I’m vaguely familiar with that, and I didn’t realize that more and more people around the world are moving around from their host countries to other countries for care. That’s a pretty pronounced process that’s going on, and it will have some impact eventually on us. I mean ours is the system that, notwithstanding all of the words to the contrary in this debate, I don’t see anything in the health care reform bill that will have much of an effect on slowing down our health care costs and our costs are so far ahead of costs anywhere else in the world that eventually we’re going to have to find a way to bring them down. So hopefully this will all be a great support in domestic and international medical travel.