The number of Americans traveling abroad for care is disputed, but “hardly anyone disputes that medical care, once a highly local business, is going global like never before,” writes Marla Dickerson in the LA Times. It deprived domestic medical providers of about $16 billion in 2007, according to consulting firm Deloitte, which predicts the number could reach $373 billion annually within a decade. Most of the money will be spent on high-margin elective surgeries, whichUS hospitals depend on for a good share of their profits.

Here are some anecdotes reported in the various source articles sprinkled throughout this issue:


  • An employed but uninsured American faced with a quote of $12-15,000 to repair tattered knee cartilage got it instead for $4,500, including airfare and concierge-level service, at a hospital in Mexico owned by Texas-based Christus Health.
  • An American small business owner needing a knee replacement found one in Mexico via MedToGo for $13,500, versus the $50,000 he had been quoted in the US.


  • An American insurance adjuster flew to Malaysia for a double artificial spinal disk implant, after his health insurer refused to cover the procedure, which would have cost $105,000 in the US. He ended up paying $27,000 in total for the surgery, hospitalization, and hotels and airfare for himself, his partner and his mother. Another American patient has been quoted $35,000 for the same procedure in Germany.


  • An American firefighter needing extensive gum surgery and caps and crowns on more than 20 teeth, which would have cost $80,000 in the US while his dental insurance would pay a maximum of $2,500 a year, got it in Mexico via Planet Hospital for $32,000, including travel.


  • An American couple is paying between $30,000 and $35,000 for fertility treatment and a surrogate mother in India, including airfare, treatment, and a return trip to pick up their baby (or babies.) That’s less than half the price of a U.S. surrogacy, and it will protect the mother—who has already had two difficult births—from another risky pregnancy and pre-term birth.


  • A Maine-based grocery chain has given its 9,000 insured employees the choice of having knee and hip replacements done at National University Hospital in Singapore, for about a third of what they would cost in the United States.

EvenNew Zealandcan perform procedures such as hip and knee replacements for less than half the price someUSfacilities charge, and is promoting itsFirst Worldliving standards and common language to American patients.

Besides lower salaries and capital costs, hospitals in developing countries also pay less for medical supplies. The same disks implanted inMalaysiaat a cost of $3,200 each are priced at $11,000 each in theUnited States.

South Korea has begun to compete aggressively with Thailand, Singapore, India and other Asian nations in offering heart bypasses, spinal surgery, hip-joint replacements, cosmetic surgery, and other costly procedures for one-third or even one-tenth of the cost in the US, with much shorter wait times. The Korean government has revised immigration rules to allow foreign patients and their families to get long-term medical visas and has altered laws to permit local hospitals to form joint ventures with foreign hospitals.

A survey of 29 Korean hospitals showed that they treated 38,822 uninsured foreign patients — excluding expatriates — between January and August 2008, compared with 15,680 in 2007, according to the government-financed Korea Health Industry Development Institute. One of the hospitals, WooridulSpineHospital, told NY Times reporter Choe Sang-Hun in November 2008 that it expected to end the year with and $1 million in revenue from about 1,000 foreign patients from 47 countries. 25 percent of those patients were from theUnited States, and 10 percent each were fromChina andJapan. The hospital now plans to expand its facilities, which include a golf course.

We can argue all we want about the risks to patients, the exploitation of surrogate mothers and transplant donors in poor countries, and so on, but anecdotes such as the ones mentioned above—all of which reported successful outcomes, by the way—are multiplying, and add fuel to the fire of medical tourism. Other accelerants, besides highUSprices, areUSregulation, the high quality of service overseas and the tens of millions of American un- and under-insured “medical refugees” seeking an affordable medical home.

Regulation: Bariatrics

In theUS, only adults with a body mass index (BMI) of 40 or greater (35 for patients with weight-related conditions) qualify for bariatric surgeries. That restriction, promulgated before gastric banding arrived on the scene in 1991, is driving overweight Americans who don’t meet the criteria toMexico, where bariatric procedures are also cheaper but not always safe.

The American Society for Metabolic and Bariatric Surgery is again recommending that the BMI guidelines be relaxed. Four years ago, the National Institutes of Health declined to reconsider them.

A “basic package” for lap-band surgery, including transportation to and from the airport, blood tests, hospital and surgeon’s fees and a “nutriologist program,” is advertised on the Internet for US$7,100. In comparison, oneUShospital charges $10,000 to $15,000 for the procedure.

Patients who visit a clinic just across the border from San Diegocan get periodic refills of saline solution (required to re-inflate their lap-band) from a network of centers in the US. “In less than two years — and with no major advertising — the network, Fill CentersUSA, has served more than 3,100 patients, said Julie Bingham, a company vice president,” reports Karen Augi of the Denver Post.

Regulation: Stem Cell Therapies

The Institute for Cellular Medicine inCosta Ricaprovides stem cell therapies to patients from theUSand elsewhere, for about $20,000. A 27-year-old quadriplegic said she was able to take a few steps on her own following the procedure, which is not available in the US, though it cannot yet be claimed that this was a result of the stem cell treatment and not just the rigorous follow-up physical therapy she also underwent.

Despite next to no credible clinical evidence that most of the therapies work—or do not work, for that matter—there is a rising tide of “stem cell tourism” targeting patients with multiple sclerosis, Alzheimer’s, and other illnesses. One biotech company claims to have treated more than 3,000 patients at its 24 hospitals facilities inChina. The simple fact is that patients with severe conditions or limited lifespans are not prepared to wait for the evidence to be accrued through years of clinical trials, and the occasional anecdotal success story is enough to keep hope alive and the medical tourism tide rising.


To avoid losing the large and growing market of un- and under-insured, Southern California insurers Aetna, Blue Shield, HealthNet, and PacifiCare have begun to offer low-premium plans providing treatment in Mexico.Aetnaalso launched a pilot scheme in 2008, in partnership with hospitals inSingapore, for procedures costing $20,000 or more. Blue Cross and Blue Shield of South Carolina has created a division called Companion Global Healthcare offering manufacturers and other firms with tight margins a 5-8 percent reduction (and eventually, they think, a 20 percent reduction) in health spending.

The second-biggest health insurer in the US, Wellpoint Inc., began offering employees of a Wisconsincompany the option of traveling to hospitals owned by Apollo Hospitals Group in New Delhi and Bangalore, India, for non-emergency procedures such as joint replacement surgery. For those who accept the option, the company waives the insurance deductible and coinsurance and pays all medical costs as well as travel expenses for the patient and a companion.

What to Do?

To avoid getting burned by all this, US providers may need to expand their service overseas, and/or cut their prices to be competitive and retain US patients, or both. Both are starting to happen. As noted below, the Cleveland Clinic has begun to expand globally, starting in Abu Dhabi, and Texas-based Christus Health has bought a northern Mexican hospital chain and is about to expand into Peru. With regard to cutting prices: Planet Hospital, a US medical travel coordinator that arranges medical treatment abroad through its relationships with providers in 13 countries, has reportedly added a handful of US doctors to its network—after they agreed to cut their prices.

HarvardBusinessSchool’s market-driven care proponent Regina Herzlinger told Jonas Bergstrand of The Economist that while medical tourism may be “a bit over-hyped today, . . . it will become huge over time.” Bergstrand concluded that “Whether or not [medical tourism] turns out to be all its boosters wish for, it will be a force to be reckoned with.”

We agree, and so, evidently, do some entrepreneurs and some large hospital chains in theUSand elsewhere. Here’s how they are responding:

Exporting US Healthcare Expertise

An American-owned and -financed operator of 13 facilities inMalaysia,India,IndonesiaandVietnamhas raised $135 million to establish another 26 “American-style healthcare” facilities inAsiaby the end of the decade, more than half of them inIndia.

The company was formed in 1994 to “adapt business methods honed in management to private hospitals serving the region’s budding middle class,” writes Ángel González in the Seattle Times. It took its CEO “one day of driving aroundBangalore,India, to see the opportunity was unbelievable.”Bangalore isIndia’sSilicon Valley, with many “underserved” middle-income households.India has 1.5 beds per 1,000 people, compared tofour to eight beds per 1,000 people in developed countries, and its population cold grow by 8 percent per annum through 2025.

Its “typical” hospital has about 65 adult beds and cost about US$15-16 million to build. It sees about 8,000 patients a month, and brings in about $12 million in annual revenue. About 70 percent of the company’s revenues come from insurer reimbursements. All of the company’s manuals and medical records are in English, and all of its doctors speak English.

Expansion inIndiais challenging because trained nurses are often lured away by higher salaries in the developed world, and because cultural sensitivities must be respected. But this isn’t stopping a  Singapore–India joint venture from tapping the same market by expanding an existing Mumbai cosmetic and spa center all across the subcontinent.

ClevelandClinic inAbu Dhabi

The Cleveland Clinic’s first overseas outpost—a 2.5 million-square-foot, multispecialty, 360-bed, tertiary-care hospital in Abu Dhabi—is now scheduled to open in 2012 rather than 2009, the date originally agreed in 2006 with the Abu Dhabi government-owned Mubadala Development Co.

Mubadala is paying for construction costs, hospital equipment, and staff salaries. The Clinic contributes its culture, standards and model of healthcare, with no capital outlay.

The hospital is now looking to recruit hundreds of North American board-certified or equivalent physicians, well-trained nurses and other health-care personnel willing to relocate toAbu Dhabi. They will receive additional training to learn the Clinic’s operations and culture.

UPMC to Open 25 Cancer Centers Worldwide

The University of Pittsburgh Medical Center (UPMC) plans to establish 25 cancer centers in Europe, the Middle Eastand Asiain the coming decade in a joint venture with GE Healthcare. UPMC already operates two cancer centers in Ireland. The cancer centers will purchase equipment from GE Healthcare “whenever appropriate,” and in return GE Healthcare will “offer its international expertise in determining the best markets for the centers,” according to Steve Twedt, reporting for the Pittsburgh Post-Gazette.

Taiwan Opens Hospitals on Mainland

USproviders do not have all the edge when it comes to exporting experience. Several Taiwanmanufacturing giants that have been running low-cost factories in Chinafor years have also quietly gained knowledge and experience running hospitals in Taiwan. Now, they are using that experience to operate private hospitals in China.

Already, 14Taiwanhospitals, including one run by the giant conglomerate Formosa Plastics Group, have opened or are scheduled to open. Formosa Plastics founded the first major private hospital inTaiwanthree decades ago, and has since built a profitable network of seven hospitals treating more than 10,000 patients daily, a nursing school, and a medical school.

Chinaopened the hospital market to foreign investment in 2000 and has since approved more than 200 applications for small joint-venture hospitals. Currently, more than 90 percent ofChina’s hospitals are state run. But breaking into the market through the Chinese bureaucratic jungle is not for the impatient or the faint of heart, one investor warns.

Telemedicine, Pure and Simple

In fact, establishing a physical presence anywhere overseas is not for the faint of heart, or the light of pocket. However, a virtual presence is possible on a shoestring.

Doctors in about 140 hospitals and clinics in 39 nations and regions including Iraq, Afghanistan, Antarctica, and the Solomon Islandsare using the services of the Swinfen Charitable Trust, a UK-based telemedicine charity organization, to seek help for patients requiring specialized care. The Trust puts them in e-mail contact with one or more of the 400 specialists who donate their services to the network.

The remote doctors e-mail photos taken with digital cameras (often supplied by the Trust), X-rays, test results, and case notes to the specialists, who respond by e-mail with diagnoses and treatment recommendations. The system has since handled almost 1,800 cases and saved numerous lives.

What is coordinating this impressive multinational operation?—A desktop computer in the English country cottage of Lord and Lady Swinfen, neither of whom had even used a computer before they began the operation in 1998.

Many telemedicine programs incorporate videoconferencing, which requires broadband service and equipment often unavailable in poor or remote parts of the world. The Swinfen Trust has shown that a significant difference can be made in access to care for those lacking it, by the use of simple and inexpensive technology.

Telemedicine will increasingly incorporate decision support and guidance. Mayo Clinic and Microsoft recently launched the Mayo Clinic Health Manager, a sort-of case management and decision support software tool for consumers. It applies care guidelines and rules developed by Mayo to demographic and clinical data in an individual’s HealthVault account, producing advice and reminders for asthma, pregnancy and immunizations from birth to end of life. High blood pressure, high cholesterol and diabetes care advice will be added later this year. Probably, surmises Matthew Holt in The Health Care Blog, it will help drive patients to seek healthcare services from the Mayo Clinic.

The Cleveland Clinic late last year also started a pilot program with HealthVault.

While these particular offerings currently target US consumers, there is no reason they cannot be attractive to overseas consumers also.

Globalization of Post-modern Medical Research

Foreign countries are now competing with the USnot just in the delivery of world-class medical care, but also in world-class research, particularly with respect to what we refer to as “post-modern” medicine—such as genomic and regenerative therapies. A Canadian study suggests that Mexico, India, Thailand, and South Africa are showing the way for developing economies to leapfrog the developed world in healthcare delivery by fostering domestic capacity in genomic medicine to improve national health through medicine personalized to the population, slash medical costs through less reliance on foreign suppliers, and bolster their economies.

The study reported that:


  • Mexico has the most comprehensive genomic medicine program, which has genotyped over 1,200 people from different regions of Mexico, resulting in a search for relationships between genetic make-up and macular degeneration, hypertension, obesity, infectious diseases, cancer, diabetes and cardiovascular diseases (the latter three representing Mexico’s top causes of death), among other conditions. Mexico has also enacted genomic sovereignty legislation to control foreign researchers seeking blood samples from Mexican citizens.


  • India also restricts the export of human samples, and also has a national databank of genetic samples, taken from about 15,000 unrelated individuals from its diverse subpopulations. An Indian life-sciences company has embarked on a five-year project to genotype the country’s entire Parsi population of about 69,000 people and determine linkages between genes, disease, and environmental factors and develop new therapies and diagnostics, with a focus on chronic diseases, such as cancer and central nervous system disorders, that can be used to directly benefit the Parsi population, with an additional potential to be marketed globally where appropriate.


  • Thailand also has a new population genomics database being used to look for gene-disease associations, including genetic susceptibility to malaria and dengue fever.


  • South African researchers are studying human genomic diversity using biological samples from several indigenous tribes, and the South African government is also considering a national genomic medicine research program with goals similar to those of the other thre countries.

Indiaand Chinatoo have made major progress in post-modern medical research and have established research- and innovation-based health biotechnology sectors, according to an article in Health Affairs. While domestic health needs have driven much of their success, Indian and Chinese biotech firms can supply existing products to, and also innovate for, the global market.

Brazil, too, is getting in on the game. Last year, Brazil’s Supreme Court upheld a 2005 law allowing embryonic stem cell research after a challenge from right-to-lifers and the Catholic church. It allows research using stem cells from embryos resulting from in-vitro fertilization that have been frozen for at least three years, and could make Brazil Latin America’s leader in stem cell research.

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The takeaway from all of this is that the globalization of healthcare is a steamroller that will change the business of US (and other developed world) healthcare businesses, for better or worse.


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