As reported in International Medical Travel Journal this week, President Obama has pledged to cure Americans from “the crushing cost of health costs.” His proposed reforms include lower prices from hospitals, salary cuts for doctors, and payment to hospitals by government insurance schemes linked to quality of care not quantity of care. He also wants to give Americans the option of a public health insurance plan. His plans follow a social insurance model which is found in some European countries.
Simplifying the funding structure within US hospitals could also lead to significant cost savings. At present an individual US healthcare provider may have to administer payments through upwards of 700 different providers.
Past research (1) has shown that while the United States spends significantly more on health care per capita than Europeans nations, Europe actually delivers more real resources per capita. For example, Europe employs a larger health workforce per capita and delivers more physician visits, hospital days, and prescription drugs than the United States. Higher prices and administrative inefficiencies account for most of this differential.
Obama’s grand plan could end the American medical tourism dream. Introducing what is in effect a publicly funded healthcare system and forcing down prices could remove a key driver for outbound medical tourism from the USA.
The IMTJ’s conclusion:
“If Americans are a target market, you need to keep a very close eye on US healthcare reform as it could quickly impact your business. You may even have to change from marketing on price to marketing on quality alone.”
…and I tend to agree.
Recent years have seen a bandwagon effect in the medical tourism sector. And it’s been a “get it cheap” bandwagon. But for decades medical tourism has been driven by patients seeking better treatment, specialist expertise, and higher quality. Some new market entrants may need to rethink their strategy.
1 Mark V. Pauly, “US health care costs: The untold true story,” Health Affairs, 1993, pp. 152–9.