Outsourcing: Is Medical Care the New Frontier?

by Eugenia Ismaylova November 5 2007, 13:27

From manufacturing to engineering, computer programming and even legal services, American companies rely heavily on outsourcing as a way to increase efficiency and reduce the cost of operations. As the cost of health care in the United States continues to skyrocket, some patients are traveling overseas to undergo a variety of medical procedures at a fraction of the cost they would pay in the United States. [1] This article seeks to examine the legal issues that arise as more and more Americans travel to countries such as India, Thailand and Mexico to receive medical care,and illustrate how U.S. insurance companies other intermediaries are capitalizing on this new phenomenon.

II. Medical Tourism – An Overview

This phenomenon, which encompasses patients going abroad for elective as well as necessary medical procedures, is often referred to as medical tourism, and is quickly growing into a multi-billion dollar industry.[2] For decades, Americans have hopped across the border to save on health care: to Mexico in order to obtain small surgeries cheaply and to Canada in order to save on prescription drugs.[3] With the current health care crisis, increasing numbers of Americans now recognize foreign hospitals can deliver not only cheap but also high-quality health care, and are considering medical tourism even for serious health problems.[4]

A quick comparison of the costs of medical procedures in the United States and their costs abroad illustrates the immense extent of the savings patients can achieve by traveling overseas:

 

Hip replacement: India $3,000, U.S. $39,000

Orthopedic surgery: India $4,500,U.S. $18,000

Cardiac surgery: India $4,000- $9,000, U.S. $30,000- $50,000

Tooth Extraction: Thailand $30, U.S. $350 [5]

 

The advantages of foreign hospitals are not exclusively pecuniary; some of the foreign "spa" hospitals that cater to Americans offer private rooms and 24-hour private nursing care.  [6] The quality of these hospitals seems to be on par with the better American hospitals and many of the doctors employed there were trained in either the United States or Great Britain.[7]

Several insurers have become pioneers in this area. United Group Programs, Inc., a consultant and third-party administrator of employer health plans based in Boca Raton, Fla., offers insurance for patients at a handful of overseas hospitals at a sharply reduced cost to the employer. [8] Patients pay no deductibles or co-payments. [9] The company works primarily with Apollo, a leading hospital in Chennai, India.[10] BlueCross BlueShield is another innovator; currently BlueCross BlueShield of South Carolina offers coverage to its 1.5 million members for major procedures performed at Bumrungrad International Medical Center in Bangkok. The plan will soon expand to include a hospital in Europe, and possibly in Singapore and India.[11] Blue Shield of California and Health Net of California offer inexpensive "cross-border" policies allowing members to get care in Mexico. [12]

 

Insurance companies are not the only enterprising businesses who have jumped in to grab a slice of the medical tourism pie. Entrepreneurs are launching travel companies to bring Americans to foreign hospitals.[13] In addition to taking care of the logistics of medical procedures, these trips often combine treatment with a short vacation or recovery period, like an African safari or a recovery weekend at a Thai beach. [14] 

 

III. Standards of Care

The inevitable question is: how can American patients be sure that the foreign medical facilities they travel to are safe and sterile and that the quality of care they receive is high? The Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”), an organization that inspects hospitals, now analyzes foreign medical centers to see if they meet high American standards. [15] Yet, as America adopts more stringent quality standards, foreign providers that wish to compete in the American health care market, the largest market in the world, will increasingly adopt our definition for medical quality.[16] JCAHO, in fact, is already facilitating the standardization of quality by accrediting hospitals in developing countries such as India and China.[17]  In addition to quality and safety concerns, there could be tricky legal issues that arise as medical tourism becomes more prevalent. Among these could be the prosecution of malpractice cases across international borders.[18] A major regulatory hurdle for employers interested in incorporating a foreign health care program into their group health plans is that foreign hospitals and doctors, unlike their counterparts in America, are not subject to the privacy and security rules of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").[19] Thus, an employer wishing to adopt such program must take extra care to minimize the risk that its group health plan will violate HIPAA when its plan participants are treated overseas.

 

IV. Conclusion

Although medical tourism may provide underinsured Americans with the opportunity to receive the health care they need, it can also take such opportunities away from people in developing countries. With developing world hospitals focusing on medical tourists, some may take doctors away from understaffed public clinics in nations like India and Thailand, potentially leading to a public backlash against medical visitors. [20] Already, the press in Thailand and India has warned that medical tourism, which can be more lucrative for physicians, is sucking doctors away from public clinics.[21] Commentators on the other side of the issue, however, have pointed out that medical tourists who have money to pay bills for these services may subsidize care for the poorer domestic populations in the foreign countries offering these services.[22] Perhaps the legal implications of medical tourism are best described by a disclaimer on the website for India's largest medical-tourism hospital, Apollo, which presents a grim message: "A prospective medical tourist should also be aware of possible legal issues. There is presently no international legal regulation of medical tourism. All medical procedures have an element of risk. The issue of legal recourse for unsatisfactory treatment across international boundaries is a legally undefined issue at present.”[23]

Even with its increasing prevalence and substantial cost savings, medical tourism is certainly not a solution to the current health crisis. Uninsured Americans should not be driven overseas to obtain healthcare services that are readily available at home.

Sources:

[1] Katharine Greider, Outsourcing Medical Care-A Better Deal for Business?, AARP Bull.,  http://www.aarp.org/bulletin/yourhealth/outsourcing_medical_carea_better_deal_for_business.html.

[2] Medical Tourism: Need Surgery, Will Ttravel, CBC News Online, June 18, 2004, http://www.cbc.ca/news/background/healthcare/medicaltourism.html.

(hereinafter "Need Surgery")

 

[3] Joshua Kurlantzick, Medical Tourism: Sometimes Sightseeing is a Look at Your X-Rays, N.Y. Times, May 20, 2007, at 7B available at http://query.nytimes.com/gst/fullpage.html?res=9A01E1D71231F933A15756C0A9619C8B63&sec=&spon=&pagewanted=2.

 

[4] Id.

[5] Need Surgery, supra note 2.

 

[6] Howard D. Bye, Shopping Abroad for Medical Care: The Next Step in Controlling the Escalating Health Care Costs of American Group Health Plans?,19 Health Lawyer 30, 33 (2007). 

 

[7] Kurlantzick, supra note 3. 

[8] Greider,  supra  note 1.

[9]  Id. 

 

[10] Kurlantzick, supra note 3.

 

[11] Greider,  supra  note 1.  

[12] Id.  

[13] Joshua Kurlantzick, Medical Tourism: Sometimes Sightseeing is a Look at Your X-Rays, N.Y. Times, May 20, 2007, at 7B available at http://query.nytimes.com/gst/fullpage.html?res=9A01E1D71231F933A15756C0A9619C8B63&sec=&spon=&pagewanted=2

[14] Id.

 

[15] Id.

[16] Thomas R. McLean, Telemedicine and the Commoditization of Medical Services, 10 DePaul J. Health Care L.131, 165 (2007). [17]  Id.

 

[18] Nick Cumming-Bruce, Thais Tap Demand for Outsourcing, Int’l Herald Trib., July 28, 2005, http://www.iht.com/articles/2005/07/27/news/hospital.php.

 

[19] Bye, supra  note 6.   

 

[20] Kurlantzick, supra note 3.

[21] Id.

[22] Keith T. Peters, What Have We Here? The Need for Transparent Pricing and Quality Information in Health Care: The Creation of an SEC for Health Care, 10 J. Health Care L. &  Pol'y 363,  382 (2007).

[23] Phillip Mirrer-Singer, Medical Malpractice Overseas: The Legal Uncertainty Surrounding Medical Toursim, 70 Law & Contemp. Probs., 211, 212 (2007).

 
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