By David G. Vequist
Medical tourism or medical travel employee benefit options could help Texas companies to save money on their health care costs. Yet even with a great deal of new evidence about organizations around the country using this strategy to reduce their employee medical expenses, this may be the one best strategy that Texas CEOs are not aware of or not implementing.
Corporate Examples of Health Care Savings with Medical Tourism
Last year, Business Insurance magazine interviewed the Director of Benefits for a North Carolina-based business, HSM Solutions, with 2,500 employees in over 50 locations. In this article it was reported that over 250 employees had traveled abroad for health care and the organization saved about $9.5 million over a six year period. To further incentivize its employees, HSM has even offered to waive copays and deductibles, cover the cost of travel for the employee and a companion, and pay a bonus of 20 percent of the savings the company would experience, up to a cap of $20,000.
The Business Insurance article suggests that because HSM’s medical tourism benefit has been so successful, the company even expanded it beyond disk replacement surgery to include bariatric surgery, knee and hip replacements, hernia operations knee, and shoulder endoscopy procedures. HSM employees can now also choose from Indian and Costa Rican hospitals. The Director of Benefits stated that in the U.S., “such a surgery would cost $300,000 to $400,000… I’m paying $38,000 (including the cost of a $5,000 airline ticket).”
But, Texas businesses don’t need to only look abroad, outside the U.S., for healthcare savings opportunities. Self-funded entities like Walmart, Lowes, PepsiCo, Boeing and others are saving money right here in the U.S. by choosing specific health care centers of excellence and negotiating volume-friendly contracts to have employees treated at some of the best hospitals on the planet.
These organizations, faced with ever higher health care bills, some of which are brought on by the implementation of the ACA, are using this strategy to get higher quality care and lower costs from the health care system by changing the game. They usually pick just a few complex & costly procedures and change the way payments are made to doctors & hospitals by negotiating fixed fees or “bundled payments” for all services – instead of the traditional, open-ended contract for services.
In an article from Bloomberg earlier this year, it is suggested that although big companies aren’t the only ones seeking to take advantage of the idea, it may “be prohibitive for a small employer, with only one or two employees needing surgery a year.” The strategy really seems to work better when an organization can spread the administrative costs over a fair number of employees. The lower costs don’t just come from the “bundled payments” but also from the lower rates of complications and readmissions at these best-in-breed hospitals. Reducing these negative outcomes can greatly reduce overall health care costs for employers.
Don’t Forget Texas Health Care Options
In addition to looking around the country for great healthcare options, Texas CEOs can look right in their own backyard. In fact, in the most recent (2014) Truven Health Analytics annual 100 Top Hospitals study (Truven reports to use objective research and independent public data to recognize the best hospitals in the nation), there are 10 Texas hospitals that made the list and would be good potential partners for Texas CEOs wanting to reduce costs and improve quality including:
The critical part of this strategy is for the Texas-based company to go in knowing about its current health care costs and employee population and ultimately pick a health care partner that has a specific expertise in a specialty benefitting the employer. Walmart already tapped a Texas-based health care facility for increasing quality and reducing its costs when it chose Scott & White a couple of years back.
As stated by the Cleveland Clinic’s Director of Marketing in the Bloomberg piece from March, 2014, “It’s a ‘win-win-win’ for patients, employers and the hospital . . . the patient has no out-of-pocket responsibility, employers have a better long-term financial result and we (the hospital) get patients.” Unfortunately, no major Texas-based companies have selected this strategy – yet.
There have been discussions with state legislators in the past year about reducing state employee and retiree health care costs and increasing the quality of care they receive (which would benefit all Texas taxpayers!) through a Texas-based medical tourism program.
In addition, municipalities like the City of San Antonio, which will reportedly spend 100 percent of their total budget on health care costs for police and fire fighters alone by 2031, are also good candidates for developing a medical tourism strategy.
As health care costs continue to grow and the calls for Texas CEOs to decrease them, it is very likely that this win-win-win strategy will make its way into Texas sooner rather than later. It would be good for Texas companies, employees and for the best health care facilities that the state has to offer.
David G. Vequist IV, Ph.D. is the Founder/Director of the Center for Medical Tourism Research – an academic center at the University of the Incarnate Word (www.medicaltourismresearch.org) in San Antonio researching the Medical Tourism industry. firstname.lastname@example.org
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