The future of “Health-Plan-Funded” treatment abroad

Dr Constantine Constantinides from healthCare cybernetics asks whether treatment abroad funded by insurance funded or company funded health plans is the future of medical tourism.Populist and simplistic thinking, based on unfounded assumptions, claims that treatment abroad funded by a health plan is the “future” of medical tourism. But I encourage you to think beyond today and tomorrow morning.

A Health Plan is another term for Health Insurance. I prefer the former term to the latter.
By definition, health insurance is an arrangement by which an organization undertakes to “compensate” in the event of illness (in return for payment of a specified premium or contribution). On the other hand, a health plan is about provision of and access to health services (in return for payment of a specified premium or contribution).
It is about “cover” as opposed to “compensation”.

Payers and cost bearers in medical tourism

In the context of medical tourism exhibitions, conferences and events, the organizers often refer to “buyers” (or even ”commissioners”) meaning medical tourism facilitators, specialty tour operators, governments, large corporations and health insurers who may hold the purse strings when it comes to paying for treatment abroad.

In medical tourism (unlike in tourism), there are no buyers. Instead we have payers and cost bearers (which can include private health plan organizations and statutory health insurance organizations). Of course, medical tourism facilitators are certainly not buyers – or even payers – or even cost bearers.

Funding… who picks up the bill?

Let us remind ourselves that medical tourism (or travel) can mean:

• Travelling abroad for treatment
• Domestic medical tourism (treatment in your own country – but not in your own city)

When it comes to travelling abroad for treatment (or treatment anywhere), the question is: “who picks up the bill?”

The answer can be:

• You (out of pocket)
• Your health plan (payer or cost-bearer):
• Public sector
• Private sector

Motivations and short-lived “market aberrations”

When considering medical tourism, many believe that the following “conventional motivations” are immutable:

• High cost at home
• Long wait at home
• Unavailability at home

But, in fact, these motivations (or incentives) are short-lived market aberrations – representing industry inefficiency. It is inevitable that market forces, and even government policy, will step in to disrupt this anomaly (and spoil the game, for some).

The unsustainability of “Health-Plan-Funded” treatment abroad

No doubt, many health services providers like the idea of “Health-Plan-Funded” treatment abroad. But even the most rudimentary analysis, based on knowledge of market forces and understanding of government policy in most countries reveals that this game is not sustainable.

It is not sustainable because the concept and practice clashes with the natural laws governing markets and the economy.

The arguments in support of this thesis are:

• Response to Competition from Abroad: Health services providers “at home” will realize that the loss of patients to competitors abroad is a direct result of their inefficiency, and will address this inefficiency by:
• Lowering costs – which will result in lower prices.
• Speeding up their patient turnover – which will reduce waiting time (ideally, “treatment on demand”)
• Make available treatments which were previously unavailable at home
• Political Embarrassment: For many governments (including the British Government and its NHS), the phenomenon of their citizens finding it necessary to go abroad for essential medical services (i.e. treatment for conditions covered by national health insurance) causes political embarrassment – and that carries political cost. Governments and politicians will do their utmost to address and deal with the “inefficiencies” responsible (mainly long waiting lists and unavailable legitimate services). And we are seeing this happening, for example, in the United Kingdom.
• Consumer Backlash: Treatment abroad” is not a “comfortable and pleasant experience”. At the very least, it is associated with “inconvenience” – and regarded as a “compromise”. In the case of “cut price” health Insurance in the USA (which mandates treatment abroad) we learned that many health consumers gauged the inconvenience to outweigh the “cost benefit” – and lashed back.
  Foreign Exchange Outflow (Capital Drain): For many developing countries (mainly in Africa), treatment abroad results in a serious outflow of scarce (and much-needed) foreign exchange. As a result governments are actively looking at ways to reduce this capital drain.
  Disincentive for local Healthcare Infrastructure Development: In developing countries, with poor healthcare infrastructure, the widespread practice of consumers seeking treatment abroad acts as a disincentive for investment in and development of facilities and services. This, again, is of serious concern to governments – which in turn motivates the adoption of policies and implementation of strategies to put an end to the practice.
  The West’s Revenge – from Source to Destination: Another factor which has acted as a “damper” on medical tourism activity, is the West’s Revenge (a phrase coined by healthCare cybernetics in 2008). It is all about countries previously regarded as “Sources of Medical Tourists” becoming Medical Tourism Destinations. If your own country is a Medical Tourism Destination why go abroad for treatment?

The EU experience… a Directive on ice

The EU Cross-border Healthcare Directive is “Health-Plan-Funded Treatment Abroad” – by another (Euro-bureaucratic) name.

Contrary to the expectations of some industry players, who saw the Directive as an imminent medical tourism bonanza, (since it was voted into law in 2013), we are observing very little in the way of cross-border movement. Of course, this has not come as a surprise to me. I was warning against irrational exuberance from the time I participated in the in the Consultation (in 2006).

In 2012, I wrote an article published in the International Medical Travel Journal titled: The European Cross-border Healthcare Scheme…”On Ice”.

The USA experience… from treatment abroad to domestic medical tourism

The Americans, ever the innovators and problem-solvers, came up with the idea of cut-price health insurance which, though, mandated treatment abroad. Things did not go as well as planned, because members of these Health Plans rebelled against the inconvenience of having to go abroad for surgery. In response, the Health Insurers found a way to minimize the inconvenience of travel by replacing treatment abroad with domestic medical travel.

The Africa example

Nigeria acts to keep patients at home … and Kenya aims to become a health tourism destination!
Nigeria, one of the several African countries targeted by hospitals in India and elsewhere, was one of the first to take action aimed at curbing treatment abroad, in order to address the ill effects of this practice on its people and the economy.

In what one can regard as an example of the African version of the West’s Revenge, Nigeria became the first African country to loudly condemn the practice of treatment abroad for its citizens (including politicians) and to implement a strategy aimed at developing its healthcare infrastructure – and thus help “keep them at home”.

For its part, the Kenyan government (in 2015) formally announced plans for Kenya to become a health tourism destination.