All Commentary
Thursday, June 21, 2018

Patients Without Borders: The Rise of Medical Tourism

The more health care is able to function like an actual free market the more options will be provided to consumers.

There is simply no way of getting around it: American health care is exorbitantly expensive. But while many people look to government to solve our nation’s health care woes, the real solutions lie elsewhere. In fact, the more the government intervenes in health care, the higher the costs seem to rise. Just look at what happened when Obamacare was implemented: costs of care rose and many families suddenly found themselves unable to afford their insurance premiums.

Where government intervention has failed the health care sector, free market innovation has become its savior.

But where government intervention has failed the health care sector, free market innovation has become its savior. The rising costs of health care in both North America and Europe have actually created a void in the marketplace. And medical tourism is filling that void by offering a whole new avenue of choice for health care consumers.

For anyone unfamiliar with the term, medical tourism is when someone chooses to travel outside their country of origin, usually to less-developed countries, in search of affordable, quality medical care. And it also happens to be one of the fastest growing global industries. In 2016, this burgeoning sector was valued at $100 billion and is expected to experience 25 percent year-by-year growth by the year 2025. And in an era of soaring medical costs, it is saving health care consumers thousands of dollars and providing them with the care they so desperately need.

The Rise of Medical Tourism

The thought of traveling outside of the United States for health care might sound absurd to many Americans. After all, why on earth would we travel to a developing country for medical treatment when we live in one of the richest countries in the world? The truth is, while American health care costs continue to rise, something quite spectacular is occurring in other parts of the globe: the costs are going down and the quality of care is going up.

In India, for example, the critically acclaimed Narayana Hrudayalaya heart hospital offers cardiac surgeries from $5,000- $7,000. The same surgery in the US would cost a patient upwards of $50,000. And as far as other medical procedures are concerned, in Costa Rica, a knee replacement surgery can cost a patient around $23,000. However, the same surgery, obtained in the US can cost anywhere from $35,000-$60,000.

In Costa Rica, the facilities are so pristine, many offer spa services and even provide a private concierge to each of its patients while they recover.

But it is not just the affordable costs that are appealing to foreign health care consumers. In Costa Rica, for example, the facilities are so pristine, many offer spa services and even provide a private concierge to each of its patients while they recover.

But India and Costa Rica are just two such examples of popular destinations for medical tourism. Countries like Brazil offer medical services at rates 20-30 percent cheaper than the US. And in Singapore, health care costs are 25-40 percent less expensive than in America. It is no wonder, then, that these countries are becoming popular destinations for medical tourists. In fact, medical tourism is becoming so popular, it is attracting consumers from all corners of the globe.

In 2016 alone, over 1.4 million Americans left the United States with the explicit purpose of seeking more affordable medical care abroad. Canada and European countries are also seeing an influx of people choosing to travel internationally in search of cheaper medical care. According to research conducted by IPK International, 3-4 percent of the global population travels abroad for health care. But all this sounds almost too good to be true. It seems almost impossible to believe that less-developed countries could offer quality care at a fraction of the cost.

Too Good to Be True?

Imagine needing a knee replacement and having your employer offer you two options; you can either pay $3,000 dollars out of pocket and have the procedure performed in the United States, or you can opt to take an all-expenses-paid vacation to Costa Rica. And on top of the free trip, you will also receive a $2,500 bonus check.

For employees of the North Carolina-based furniture manufacturer, Hickory Springs Manufacturing, this is a choice many get to make. And it should come as no surprise that more than 250 employees have made the decision to take the trip to Costa Rica. But before you start thinking that this all seems too good to be true, let us consider what the employer has to gain from this.

In the five years that Hickory Springs Manufacturing has begun offering to send its employees abroad for medical treatment, the company has saved over $10 million on health care costs. On paper, this seems almost impossible, especially since the employee needing care also receives first-class airfare and a personal assistant during their stay, not to mention the bonus check. But since the actual cost of care is half the cost of the same care in America, the company still saves an enormous amount of money by treating their employees to top of the line care.

How Do They Do It?

Medical tourism sounds great, but many might be wondering how it is feasible for these facilities to offer such high-quality care at such low prices.

For starters, western medical care has become so burdened by regulation that it prevents health care providers from offering the best possible care. American heart surgeons, for example, have restrictions placed on them dictating how many heart surgeries can be performed per day. The logic behind this is that by capping the maximum number of procedures each day, they ensure that the doctor is not too tired to perform a surgery to the best of his or her own abilities. But this also causes costs to go up, as demand is higher than the supply, and also results in long wait times for vital operations.

Medical tourism is becoming so popular, it is attracting consumers from all corners of the globe.

But in the absence of these restrictions, the famous Narayana Hrudayalaya heart hospital in India has been able to use economies of scale to “mass produce” heart surgeries. And by maximizing the output of surgeries performed, the hospital has been able to drastically lower costs and wait time, making care accessible to even the poorest patients. And while many first-world surgeons have worried that performing so many surgeries in a day might be dangerous, Narayana Hrudayalaya actually has success rates that are higher than the United States.

And since popular medical tourism destinations do have fewer restrictions placed on them, it is also easier to adjust their models to meet consumer demand without having to jump through regulatory hoops.

But fewer government restrictions on health care does not mean that the patients are in danger. To be sure, any medical procedure comes with its own set of risks, no matter where it is performed. But just because these facilities are not mandated to abide by western standards of care, doesn’t mean they don’t maintain high standards voluntarily. And in many instances, these foreign facilities actually surpass western hospitals, as evidenced by Costa Rica.

And as the medical tourism community has grown, so has the need for private, voluntary accreditation boards that help medical tourist choose the right care for them.

As reported by Patients Beyond Borders:

Trusted international accreditation has become one of the biggest drivers in the growth of the medical tourism market. Responding to a global demand for accreditation standards, the US-based Joint Commission launched its international affiliate agency in 1999, the Joint Commission International (JCI). In order to be accredited by the JCI, an international hospital must meet the same set of rigorous standards set forth in the US by the Joint Commission. More than 800 hospitals and clinical departments around the world have now been awarded JCI accreditation and that number is growing by about 20% per year.

More recently, established agencies that accredit outpatient clinics, such as The Accreditation Association of Ambulatory Health Care (AAAHC) and The American Association for Accreditation of Ambulatory Surgery Facilities (AAASF) have launched international initiatives that address ambulatory care.”

Since many medical tourism facilities do not accept medical insurance, they are also able to work directly with the patient when it comes to setting a price and arranging the terms of payment. Since the physicians do not have to spend time trying to accommodate both the government and insurance providers before giving treatment, they are free to focus their attention primarily on the patient.

Another reason the costs are able to stay so low is free market competition. Money is a powerful incentive and medical tourism brings in revenue that is appealing to both governments and the medical tourism facilities, which keeps the entire industry competing for patients.

In Joe Quirk’s Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Libertate Humanity from Politicians he writes:

As an industry, medical tourism far outstrips regular tourism. For instance, Israel scrambled to overhaul its tourism industry when a report released in April 2013 from its Health Ministry estimated that medical tourists, on average, spend nearly $5,000 per visit, compared with about $1,500 for sightseers.”

Since these different destinations are now competing for patients the way other private entities compete for customers, they are able to function like an actual market, which means they respond to consumer demand. If a country’s government notices that by promoting less onerous health care laws, they attract foreign health care consumers, which in turn brings in more revenue to the state, they are going to be incentivized to continue this practice, or even improve existing laws.  

An Entrepreneurial Approach to Health Care

The more health care is able to function like an actual free market the more options will be provided to consumers. And with more options available and thus, more competition, the lower prices will become. Literally, everyone wins in this scenario.

As Quirk writes:

We groan at such facts only because we know our hospitals are trapped in a particular jurisdiction of laws. But if we think like entrepreneurs competing to provide better, cheaper services, this sounds like an exciting potential for profits.”

But as we have seen, this also creates the exciting potential for patients to receive quality care.

When we search for solutions to America’s surging costs of health care, many of us assume that the answers lie in government action. However, the more the government intervenes the higher costs of care seem to grow. So rather than waiting on Washington to provide viable solutions, health care consumers and medical innovators are pushing the boundaries of patient care far beyond international borders.

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.