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U.S. hospitals could certainly do with a little global competition. For years, their share of the national heath-care bill has grown at a rate far faster than inflation, and today they gobble up a third of all medical expenditures. At current rates, the U.S. will be spending $1 of every $5 of its GDP on health care by 2015, yet more than 1 in 4 workers will be uninsured. The ingrained inefficiency of most hospitals doesn't help. "A lot of them still don't know how to schedule their operating rooms efficiently," says Reinhardt. "They've never had to. They always get paid, no matter how sloppy they are."
That sloppiness, among other things, widens the price gap with foreign hospitals that entrepreneurs are exploiting. United Group Programs (UGP) of Boca Raton, Fla., a third-party administrator that sells a low-premium, bare-bones form of coverage called a mini--medical plan, this month began promoting Bumrungrad Hospital as a preferred provider to its customers. Employees of self-insured businesses who use the more conventional plans designed by UGP will also have access to the Thai hospital. This means that UGP offers the option of partly or fully covered medical tourism to some 100,000 people, including those who could use it most.
Mini-med plans are increasingly popular with contract and hourly workers, who are more likely than most other workers to be uninsured. But these plans are controversial because the buyers often think they cover more than they actually do. UGP's plans at best cap reimbursement for surgery at $3,000 and hospital stays at $1,000 a day. That would barely cover an afternoon in a U.S. hospital. But in Thailand, says Jonathan Edelheit, UGP's vice president of sales and marketing, a heart bypass that would cost its U.S. customers $56,000 could be had for $8,000.
Companies with traditional plans are also taking the initiative. Blue Ridge Paper, which makes the DairyPak brand of packaging, was carved out of the forest-products firm Champion International when its employees bought a few factories that were scheduled to close. But health-care costs are hurting the company. So a Blue Ridge team plans to visit hospitals in India to assess their quality of care. If it gives the green light, Blue Ridge will begin promoting the option to its 2,000 workers.
Employees who opt for India would get to take along a family member, says Darrell Douglas, vice president of human resources, and the whole experience, including a recuperative stay at a hotel, would be covered. IndUShealth, a medical tourism start-up in Raleigh, N.C., will make all arrangements and coordinate care between U.S. and Indian providers. The sweetener: the company will share with these intrepid employees up to 25% of savings garnered from the outsourcing.
Get a new hip--and a rebate. Sounds like a bargain, but would people actually travel 10,000 miles for medical care just to make a few bucks? You bet. Polls commissioned by Milstein suggest that few consumers would opt for surgery abroad for incentives below $1,000. But raise the ante above $1,000, and the equation changes. Among people who have sick family members, about 45% of the underinsured or uninsured declare they would get on the plane; even 19% of those who have insurance say they're game. Above $5,000, the percentage of takers climbs to 61% and 40%, respectively.