Israel Government attempt to increase medical tourism hits internal opposition

While the Prime Minister’s Office (PMO) seeks to expand medical tourism in Israel, both the finance and health ministries, who fear that more medical tourism will mean less service for Israelis, are strenuously opposing it. The tourism ministry is faintly supportive.

The ministries say local hospitals are already overcrowded and understaffed, and there is not enough room in medical wards. But medical tourism reaps a decent income each year for Israel, and both public and private hospitals take part.

Most medical tourists come from the former Soviet Union. An estimated 30,000 patients come to Israel every year for treatment; cancer treatments make up 80% of the market. But this 30,000 figure has now been in use for at least five years, well before the global recession. So the truth is that nobody really knows how many medical tourists there are and if the numbers have been increasing, steady or decreasing. What is clear that while medical tourists used to come from a range of countries, people from Russia and other former Soviet bloc countries now dominate the business.

The director general of the PMO, Harel Locker, met with senior officials from the finance, health and tourism ministries. He asked the participants to put together a plan to increase medical tourism. But the welcome he got was not what he expected. Deputy Health Minister Yaakov Litzman hit out with, “The health system is already operating at full capacity; there are no empty wards with extra doctors. So if we bring in more patients it will come at the expense of Israeli patients.”

There is a two-tier price system with medical tourists being charged much higher prices than Israelis, about 50% higher on average. The hospitals argue that they charge medical tourists a fair price while what Israeli hospitals are reimbursed for by the state or health funds is too little. But government officials privately accuse hospitals of profiteering. Health and finance ministries are concerned that hospitals will give preference to foreigners and that this will lead to distortions in the allocation of resources. The ministries also fear that increased private medical care for tourists will lead to inflationary wages for doctors, which could upset the delicate balance keeping the health system functioning. Yaakov Litzman has his own solution: Take private medical tourism out of the public hospitals and move it exclusively to private medical hospitals and clinic. The goal is to prevent medical tourism from cutting into the operations of the public system.

After the meeting where the other ministries wanted to reduce medical tourism in public hospitals rather than increase it, all that a subdued and ego-battered PMO would admit was, “The matter is still under examination.”

The hospitals with the largest revenues from medical tourism are the largest hospitals in Israel, including the Hadassah medical centers in Jerusalem, Sheba Medical Center in Tel Hashomer, Rambam Medical Center in Haifa, Ichilov Hospital in Tel Aviv and Assouta Medical Center in Tel Aviv.

State hospitals took in NIS 240 million in revenues from medical tourism in 2011, says the health ministry. This was a 50% increase over 2010.These figures do not include private hospitals or those belonging to Clalit Health Services, such as Hadassah, Assouta or Beilinson Hospital at the Rabin Medical Center in Petah Tikva. These hospitals are estimated to take in more than twice as much from medical tourism as the public ones do.

What attracts hospitals to medical tourism is that the amounts paid by foreigners are 150% of what the hospitals receive for treating Israelis. In addition, tourists usually pay immediately, or in advance, and the hospitals do not have to wait months for reimbursement, as they do from the state. Medical tourism also brings in hefty revenues for the Israeli tourism industry, as most patients are accompanied by family members who then stay in hotels and spend elsewhere, often for extended periods.

Most of the medical tourism industry operates via agencies and perhaps they should ask themselves if it is morally right for hospitals to charge medical tourists 50% more than locals.