Large companies try domestic medical tourism

The effort comes after patients resisted being sent to other countries for care.

By Victoria Stagg Elliott — Posted Jan. 9, 2012

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During the past year, Lowe's Companies paid for 38 employees or their dependents, including three children, to travel to Cleveland Clinic for heart surgery that was fully covered by health insurance with no co-pays or deductibles. PepsiCo announced on Dec. 8, 2011, that a similar arrangement will be available for their employees to travel to Johns Hopkins Medicine in Baltimore for care.

International medical tourism, where patients cross borders for less expensive care, never really took off. Some employers are looking closer to home as a means of controlling health care costs and improving outcomes.

"Employers are taking a much more aggressive stance with regard to benefits and want to influence employee choice," said Patricia M.C. Brown, president of Johns Hopkins HealthCare, the managed care arm of Johns Hopkins Medicine.

Medical tourism companies, which make arrangements for corporate and individual clients, are shifting their focus to domestic trips. Several cities, including Miami and Las Vegas, are starting to market themselves as destinations for health care services.

"Localities are identifying areas of expertise and asking, 'What are we brilliant at?' 'How can we position ourselves?' 'Are we good at certain types of cancer treatments?' 'Are we good at plastic surgery?' " said Simon Hudson, PhD, director of the Center of Economic Excellence in Tourism and Economic Development at the University of South Carolina.

These arrangements between large companies and health facilities mean patients will pay less out of pocket for care. Companies pay a flat rate for some procedures. Large health institutions can build more of a patient base across the nation. That means some physicians, particularly those who carry out procedures, no longer may be competing for patients with MDs and DOs down the street but across the country.

"Everybody thinks their physician is above average, but they are not," said Terry White, president of BridgeHealth Medical, a health care tourism company based in Denver. "We're going to have a lot more emphasis on quality. Before, patients went where their referring doctor said they should go. Now, you have companies cutting these kinds of deals. Companies want to save money, and there's a recognition that some places are consistently doing better than others."

Although there are no numbers on the exact number of insured patients traveling elsewhere for care, the percentage of employees doing so appears to be very small.

Lowe's has 234,000 employees and many more dependents covered by its self-funded health insurance plan, according to the 2010 annual report. The company announced Feb. 16, 2010, that heart surgeries at Cleveland Clinic will be an employee benefit. PepsiCo's U.S. employees will have the option of traveling to Johns Hopkins for cardiac and joint-replacement surgeries. The program covers about 250,000 employees and dependents. Both companies may expand their domestic medical tourism programs to cover other procedures.

"We want people to have choices," said Kyle Wendt, Lowe's director of benefits. "That's really what the goal of this program is."

Bruce Monte, senior director of PepsiCo's health and welfare benefits, said: "In providing access to surgical excellence, we expect the best outcomes in terms of care and recovery. For employees, we want to make what can be a challenging experience go as well as possible. The arrangement also offers predictability of cost for PepsiCo as procedures are part of a bundled rate -- an all-inclusive rate for hospital and physician charges and certain preoperative testing. We're not intently focused on cost savings, but rather clinical outcomes."

Representatives of Cleveland Clinic and Johns Hopkins say more of these arrangements are in the works. Such deals usually involve a bundled payment that covers most of the necessary care related to a particular procedure. Payments are then distributed to physicians and others involved in care. An outside company generally arranges travel provided to patients and their companions.

Journeying to another country such as India, Thailand, Singapore and Mexico, as pushed by other medical tourism arrangements, has been a tough sell for most Americans. Only $600 million has been spent on medical travel out of $2.5 trillion spent annually on care overall, according to the Organisation for Economic Cooperation and Development.

Lowe's considered hospitals in Mexico, but went for Cleveland Clinic when it became clear that domestic travel would get more buy-in from workers.

"A lot of our employees live in rural areas," Wendt said. "Going to Cleveland is a big decision for them, but much more compelling."

Patients eligible for domestic tourism programs must be healthy enough to travel. There must be time to plan the trip and schedule the surgery, so these arrangements are not used for emergencies.

American Medical Association policy supports innovative models of care as long as participation is voluntary. Policy related to international medical tourism also may apply. Prolonged sedentary travel can be a risk factor after surgeries, and local follow-up care should be arranged, according to a June 2008 report from the AMA Council on Medical Service.

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