Outsourcing The Patient

We rarely associate hip surgery with swaying palms, spas, or a personal concierge who carries your bag. Even more rare is the idea that these amenities are the fringe benefit of a surgery that costs half the price. And what if that surgery took place, not in the U.S., but at a state-of-the-art hospital in India, or Costa Rica, or Thailand? This is the pitch from those that are betting that the future of first-world health-care lies off-shore. When and if you need a hip transplant—or other major surgery—your HMO may steer you to an "in-network" hospital halfway around the world.

The business began 15 years ago when well-heeled patients realized that they could not only hide out in Brazil until their face lifts healed, but they could also nip and tuck their non-elective surgical bills as well. The trend grew as middle-class patients in Canada and Britain who lost patience with the long wait lines in their public health-care systems followed in their footsteps. Now it’s not just the fed-up, adventurous, or rich seeking overseas medical care for themselves. Some big American health insurers are starting to build what they're calling a "globalized health-care services system" for those under their care. In other words, they're looking at outsourcing the ill.

UnitedHealth, which has over 70 million Americans under its care, has already moved to make Bumrungrad International hospital in Bangkok "in network." When Aetna, with 37 million members, bought the overseas insurer Goodhealth Worldwide last year, Aetna's CEO explained the move by saying that globalized surgery is "an important emerging trend." The company has already started a pilot program to send patients abroad for hip and knee replacements.

Surgeons in the United States hate the idea. Yet there is little question that the standard of care in foreign hospitals can be as good as in American hospitals—and some argue that the best off-shore surgical centers are actually better than their American counterparts. Dubai Healthcare City is a brand-new, state-of-the-art development that, when completed next year, will include 17 separate hospitals, each devoted to its own specialty. All of them are closely affiliated with Harvard. Surgeons there are well-trained, U.S. board-certified, and performing with impressively low morbidity rates. Mumbai; Seoul, South Korea; Istanbul, Turkey; Xinjiang, China; and Islamabad, Pakistan, also have Harvard-affiliated hospitals, although the complex in Dubai is the most ambitious by far.

For insurers who want to outsource, the  main question is how to convince patients to hop a 25-hour flight for a triple bypass. "We need to create incentives ," says David Boucher, the founding CEO of Companion Global Health, a new division of Blue Cross Blue Shield of South Carolina, that is billing itself as the "one-stop shop" of global surgery. "We're going to have to waive co-payments and deductibles in addition to booking all the travel arrangements." A May 2008 McKinsey study found that currently around 20 percent of the 40 million in-patient admissions in the U.S. are well-suited for the better value of medical travel. The study found that  500,000 to 700,000 patients who want to save more than $10,000 are the most realistic candidates for off-shoring—and they estimate a total savings of $33 billion. Its advocates see globalized health care as the "disruptive innovation" needed to control costs in the U.S. health-care system.

Not all medical economists are so pleased with the multibillion-dollar windfall such a system might represent, however. They argue that the focus ought to be on fixing the American system (and our bodies) on a deeper level, at home, through integrated health-care systems built around preventative care and managing diseases. The real way to save money, argues Linda Green, a health-care expert and professor at Columbia Business School, is by re-directing incentives to focus preventative care, so that "problems don’t escalate into expensive hospital stays and surgeries" in the first place. Outsourcing expensive surgery just compounds the problem we already have, she argues, "since there is virtually no continuity in care."

Others—including Clayton M. Christensen, a professor at Harvard Business School and the author of a new book, The Innovators Prescription: A Disruptive Solution for Healthcare—respectfully disagree. They see the off-shoring of surgery as the way for HMOs to wean hospitals and physicians off the idea of surgery-as-profit-centers and onto preventative care and disease management. And besides, with advances in communication technologies, who's to say that a patient's primary-care physician stateside can't be intimately (albeit virtually) involved in these off-shore surgeries?