Elise O’Keefe, a 48-year-old office manager in Las Vegas, was a candidate for a total hip replacement, and while her husband Clark's health policy would cover the surgery, she was facing paying about $5,400 of expenses herself.
Then Clark overheard a coworker discussing domestic medical travel, the emerging practice of traveling to a U.S. hospital that provides surgery — from joint transplant to heart bypass — at a substantial discount.
In mid-June, Elise and her mother traveled to Newport Beach, Calif., where James Caillouette, M.D., who has performed thousands of hip and knee procedures, implanted the artificial hip.
“It cost me nothing out of pocket, and it could not have gone smoother," O'Keeffe says. "It really seemed like it was too good to be true, but it was everything they said it would be."
After an overnight stay at a surgery center, O'Keeffe spent several days resting at a hotel, with daily visits from a physical therapist before flying home.
Paying less for the best
Cost-conscious patients are starting to follow O'Keeffe's lead, as medical travel firms negotiate attractive rates with doctors, clinics and hospitals and market them to insurance companies, employer-funded health plans and individuals. While hospitals don't like to tout the fact that they offer good deals on some of their specialties, patients across the country are now traveling to some top-notch medical centers, including the Mayo Clinic and the Cleveland Clinic, to save money on their procedures.
"We've been contracting with major insurance companies and administrators to offer this service," says Victor Lazarro Jr., cofounder and CEO of BridgeHealth Medical, the Greenwood Village, Colo., company that O'Keeffe used.
Since its launch in September 2007, BridgeHealth has built a network of 25 hospitals around the United States, Lazarro says. "We only contract with a hospital for what they do well," he says. So joint replacement cases are sent to hospitals and surgeons with a lot of experience performing replacements, while patients seeking a heart bypass would go to places where that is a specialty.
More surgical experience correlates with better results, Lazarro says, yet most insurance plans send patients to preapproved local hospitals, regardless of their areas of expertise.
BridgeHealth offers patients and insurance companies a fixed fee — typically 20 to 40 percent less than what an insurer would pay for a procedure performed locally. Meanwhile, it assigns case managers who arrange all medical and travel logistics on behalf of the patient.
Companies like BridgeHealth can negotiate such attractive rates in part because they bring in patients that the hospitals would otherwise not have seen. Many hospitals have excess capacity, Lazarro says, so filling those empty beds — even at a reduced fee — makes financial sense.
Closer to home
Medical tourism has been around for some time, with prestigious U.S. hospitals courting well-heeled foreign patients and Americans flocking to places like Mexico and Costa Rica for affordable dental and cosmetic procedures that their insurance wouldn't cover.
But as Americans faced escalating medical costs, some found they could receive joint transplants and heart procedures in places like Thailand, India and Singapore for a fraction of what they would pay at home. For example, a coronary bypass costing $100,000 in the United States might cost only $8,500 in India.
About 750,000 Americans traveled abroad for medical care in 2007, according to figures compiled by the Deloitte Center for Health Solutions. The numbers dropped in 2008 as the U.S. recession took hold, but the forecast is for resumed growth in coming years.
Meanwhile, American hospitals and doctors have taken note, says Renée-Marie Stephano, president of the Medical Tourism Association. Patients choosing to travel abroad for their care have "changed the domestic health care market," with hospitals and doctors now more open about what they charge.
Employers who fund their workers' health coverage are also eager to contain mounting medical costs, Stephano says. They may offer a range of inducements to persuade a patient to have a more affordable procedure, she says.
A $100,000 heart bypass could be had for as little as $32,000 at hospitals working with a facilitator (according to figures provided by BridgeHealth).
Bob Ihrie, senior vice president for employee rewards and services at Lowe's Companies Inc., led a group of five large employers who negotiated special rates with the highly respected Cleveland Clinic to perform heart, back/spine and knee/hip surgeries. While the other companies have not yet announced their plans, Lowe's has already sent 16 employees to Cleveland for surgery since the program launched on April 1, with 14 others scheduled for procedures or awaiting approval.
"We said to ourselves if we got 10 people the first year, we thought that would be a home run," Ihrie says. "Our expectations are going to be vastly exceeded."
Although the savings in surgical costs amount to just a fraction of the more than $700 million Lowe's spends each year to provide medical services to 205,000 employees and their dependents, the company expects to reap other benefits in the form of fewer postsurgical complications and higher employee satisfaction, Ihrie says.
Still, domestic medical tourism has a way to go before it becomes mainstream. According to the Deloitte study, just 8 percent of the consumers it surveyed in 2009 had sought care outside their immediate community, but 40 percent said they would consider it if their physician recommended it — or for a 50 percent cost savings.
Domestic medical travel presents fewer logistical barriers than travel abroad, says Michael D. Horowitz, M.D., a cardiac surgeon-turned-health care consultant. "You're never more than three time zones away," he says. "You have a common telephone network. You don't need a passport or a visa."
And should anything go wrong, U.S. malpractice laws apply, as opposed to the rules of a foreign legal system, he says.
Joe Holt, vice president of Auxiant Inc., a Madison, Wis., health plan administrator who manages employer coverage for 100,000 people, predicts domestic medical tourism will grow more popular as businesses look for ways to cut health care costs.
"Two years from now, I think, it's going to be pretty commonplace," he says. As it is, the health plans Auxiant administers are realizing 20 to 30 percent savings through domestic medical tourism.
Sweetening the deal
Auxiant advertises the travel option to its covered employees, sweetening the deal by offering to waive the deductible, cover travel expenses for the patient and a loved one, and pay a cash bonus, he says. And many of the hospitals have first-rate reputations.
"If the plan will pay you $2,000 to go to the Mayo Clinic to have a procedure, it's more attractive," Holt explains.
The patient response has been positive so far.
"I don't feel like anything was sacrificed," O'Keeffe says. "In fact, it was one of the best surgery experiences I've had."
Michael Haederle is a freelance writer whose work has appeared in People, the New York Times and the Los Angeles Times.