Ten Years On: One Person’s View of Where Medical Tourism Will Be in Ten Years

Posted by Richard Krasner

Author’s Note: The following article was written last May for a Medical Tourism publication that requires original content, so I have not posted it to this blog until now. It was recently brought to my attention that they may not be around much longer, so that is why I am posting it at this time.

In these uncertain times, it is difficult, if not impossible, to predict from one minute to the next, one day to the next, one month from the next, or one year to the next, how any industry will grow and what its future will look like. So to predict where one sees the medical tourism industry going in the next five to ten years is anyone’s guess. But there are a few key indicators of what might happen if certain trends hold true.

In my first six months of blogging about medical tourism and workers’ compensation, I have found three key indicators of where the industry might go if the trends they signal continue for the next five to ten years. These indicators are costs, immigration reform, and technology. The cost indicator can be further broken down into its component costs, i.e., in-patient hospital costs, outpatient services costs, consolidation of US hospitals which lead to higher costs, and costs to employees covered under their employer’s health care plans, as more employers shift the burden to the employee.

There may be other costs that will affect the medical tourism industry’s growth in the next decade, but the costs listed above have a more immediate effect because they impact patients more than they impact the health care system at large. While it is true that hospital costs will impact everyone, the patients will experience it more because it may limit them to choosing certain hospitals that charge less for the treatments they require, but at lower quality of care. There will always be one hospital that charges the most and one that charges the least, so the patients may be forced to choose between one, and the other.

This article will outline some of the things I think will determine the future of the medical tourism industry, and is based on my knowledge of the US healthcare system and my workers’ compensation background. It is by no means an exhaustive inquiry into the future of medical tourism, but it is hoped that the reader will get a better idea of the state of the industry in the years ahead.


Hospital Costs

As I reported in my blog article, Rising Hospital Costs: What they mean for Workers’ Compensation and Medical Tourism, workers’ compensation carriers were noticing that their bills and payments to hospitals for inpatient and outpatient services were increasing significantly faster than other costs. I cited a report from the Workers’ Compensation Research Institute (WCRI) that shows that facility costs were up in several states, including Indiana, which was the focus of the report. The WCRI reported that Indiana’s costs were substantially higher than the median states WCRI mentioned in the report. This increase was driven by prices. Indiana, which does not have a fee schedule for facilities, means hospitals there can raise prices whenever they want, and are doing so.

The WCRI also reported that overall hospital payments per stay increased 12% per year from April 2005 to September 2010. At that rate, workers’ compensation carrier’s costs will double every six years. In addition, an article in the New York Times on December 18th, 2012, that stated that hospitals are likely to get huge cuts from the fiscal cliff deal, and that Medicare cuts will target hospital reimbursements.

At time I wrote that article, I predicted that as far as medical tourism is concerned, in-patient services were where the industry will have the greatest opportunity to address this problem. Rising US hospital costs may force US workers’ compensation carriers to look for lower cost, better quality health care services for their insured’s injured employees, something which medical tourism is already offering the private insurance market in the US.

Outpatient Costs

Sometime after I wrote about increasing in-patient hospital costs, I wrote another article about outpatient services costs entitled, Outpatient Facility Costs Rising Could Benefit Medical Tourism Industry. In that article, I reported that the Workers’ Compensation Research Institute had released another study that analyzed the outpatient facility costs, cost drivers, regulatory mechanisms, and trends in 20 states.

The report, found that:

States with no fee schedule regulation on reimbursement had higher hospital outpatient/ASC (ambulatory surgical center) costs than states with fee schedules. The costs in states without fee schedules were 27 percent to 73 percent higher than the median of the study states with fee schedules.
States with fee schedule regulations that were based on a percentage of charges had higher costs compared to states with other types of fee schedules, such as per-procedure based or ambulatory payment classification (APC) based fee schedules, with the exception of Illinois.
After fee schedule changes, growth in hospital outpatient/ASC costs resumed at faster rates in states with fee schedule regulations that were based on a percentage of charges.
Significant variations in hospital outpatient/ASC costs were also found across states. Compared with the 17 state median, the average hospital outpatient/ASC cost per surgical episode in Massachusetts—the state with the lowest costs—was 60 percent lower than the median study state, while the average cost in Illinois—the state with the highest costs—was 45 percent higher, as of 2009.
I also stated that as facility costs rise in these 20 states, due to changes in Medicare and Medicaid hospital reimbursements, cheaper, more cost-effective forms of treatment will become valuable to the payers who are now looking at higher facility costs, even for outpatient services.

I predicted then that should costs rise too much for even most workers’ compensation payers to pay, alternatives in medical tourism will be more and more attractive, especially for more serious cases, and perhaps, for those that otherwise would have been treated on an outpatient basis domestically.

To take advantage of this increase in outpatient costs, medical tourism facilitators should factor in the cost of treatment, travel and accommodation expenses, so that medical tourism could compete quite favorably with US hospitals in these states, and others, where facility costs will have skyrocketed out of control.

Consolidation of US Hospitals leading to higher costs

The consolidation of hospitals across the US had led to higher healthcare costs from higher hospital spending, according to a blog I cited in my blog post, Consolidation of US Hospitals Lead to Higher Costs and Reduces Quality.

The blog I mentioned in my article stated that hospital spending is the key driver of healthcare costs in the US and has been growing at nearly 5% year over year. One cause of this consistent increase in spending is the continuing consolidation of hospitals around the country.

This increase in consolidation, has given some merged hospital systems oligopoly power to impose fees that are far higher than those found in areas with high market competition. Statistics show that hospital consolidation in highly concentrated markets have driven prices up by as much as 40%.

Because they have increased market power and leverage, hospitals charge private payers higher prices and are more successful in “cost-shifting” as a result of providing underfunded care. Studies show that stand-alone and community hospitals typically receive payments from private payers which are closer to Medicare/Medicaid fees.

Some of the impacts to cost and quality are as follows:

Increases the price of hospital care.
Increases in price due to hospital consolidation are largely passed onto consumers through higher premiums, higher deductibles/co-pays and even lower wages.
Reduces quality of care, through decreased market competition.
The focus of hospital consolidation is on reducing competition to increase market bargaining power when dealing with insurers. This reduction in competition also has an impact on quality and patient choice. Consolidated hospital systems may be less motivated to offer innovative, efficient methods and improvements to care quality in order to attract new patients.
Consolidation hasn’t led to lower costs or improved quality.
Integration of merged hospitals may lead to enhanced performance through achieving efficiencies, greater coordination and revising processes to unify entities. Consolidation alone only combines multiple entities under one group to increase market power, not necessarily fusing them together for improvement.
This is another area of costs that will have a definite impact on the future of the medical tourism industry, because hospital consolidation shows no sign of slowing down or halting altogether. And as we shall see in the next and last cost category, the impact of ever increasing costs in health care in the US will eventually lead to the one sector of healthcare that will suffer the most — the patient.

Cost to Employees

Up to now, I have discussed the impact higher costs may have on the future of the medical tourism industry in the next five to ten years. However, many of these costs will be borne by payers, not by the patients themselves. Where the trend in increasing costs does indicate that patients will be affected is in a survey released recently by the US health insurance company, Aflac, famous for its Aflac duck commercials.

The Aflac survey revealed that employees were not prepared for increased costs, and may not want control of their options, and that they lack the education about what is meant by “consumer-driven health care.”

The report finds that employees are not financially prepared, and that:

Only 24% of workers completely agree or strongly agree they will be financially prepared in the event of an unexpected emergency or serious illness.
Further, 46% of employees have less than $1,000 to be able to pay for out-of-pocket expenses associated with an unexpected serious illness or accident, and 25 percent of employees have less than $500.
Four-in-ten (40 %) of workers would have to borrow from their 401(k), friends and family to pay for out-of-pocket expenses associated with an unexpected serious illness or accident; 28 percent would have to use a credit card.
The report also states that:

Nearly three-quarters (72%) of the workforce have not heard of the phrase “consumer-driven health care;”
More than half (54%) of workers would prefer not to have greater control over their insurance options because they don’t have the time or knowledge to effectively manage it;
62% of workers believe the medical costs they will be responsible for will increase, while only 23 percent are saving money for potential increases;
75% of workers said they think their employer would educate them about changes to their health care coverage as a result of reform, but only 13 percent of employers said educating employees about health care reform was important to their organization.
Lastly, the report found that among consumers of health care plans:

32% are not very/not at all knowledgeable about health savings accounts (HSA)
Three out of four (76%) are not very/not at all knowledgeable about federal and state health care exchanges
Almost half (49%) are not very/not at all knowledgeable about health reimbursement accounts
25% are not very/not at all knowledgeable about flex spending accounts (FSA)
The net result of this is that cost-shifting from employer-sponsored health care plans to workers’ compensation will hasten the day medical tourism is implemented into workers’ compensation, so that employers and carriers can take advantage of the lower costs of medical care abroad.

There is no doubt that health care costs are rising and will continue to rise in the foreseeable future. The Affordable Care Act (ACA) was enacted to reduce costs, but many critics of the law believe that it will do the opposite. Only time will tell if these critics are right. In the event that cost do rise, the medical tourism industry must be ready to meet the challenges that higher costs present to the American people.

Immigration Reform

Immigration reform would seem like a very unlikely indicator of what the future of medical tourism will be, but it needs to be addressed for the purposes of implementing medical tourism into workers’ compensation. Since the end of the US election last November, both political parties, the Democrats and the Republicans, have been involved with staking a position on comprehensive immigration reform.

The majority of Democrats have backed efforts to reform the American immigration laws, while half of the Republicans in both houses of Congress, and a considerable portion of their electoral base, opposes immigration reform. The results of the Presidential election brought home one clear fact, the demographics of the US is changing, and the growth of the Latino community is a part of that change. So it behooves a political party that wants to be viable in the future to support immigration reform. The party that refuses to do so, does at their peril.

In Immigration Reform on the Horizon: What it means for Medical Tourism and Workers’ Compensation, I focused on the report by the Independent Insurance Agents & Brokers of America, Inc. (IIABA) and the Pew Hispanic Center, that stated there are probably 11 to 12 million undocumented immigrants in the US, depending upon how many “self-deported” due to the current US economic slowdown, of which demographically, this represents 5.4 million men, 3.9 million women, and 1.8 million children. In addition, there are 3.1 million children who are US citizens having been born here (64% of all children of the undocumented) from one or more parent.

I also mentioned that the report stated that out of the total number of undocumented adults, 9.3 million, 7.2 million (77%) are employed and account for around 5% of the US workforce. They comprise a disproportionate percentage in some industries, such as 24% of farm workers, 17% of cleaning workers, 14% of construction workers, and 12% of food preparers. These industries are some of the more typical industries where workers’ compensation claims are filed from.

Within a particular industry, undocumented workers comprise a higher percentage of more hazardous occupations, e.g., 36% of insulation workers and 29% of all roofing employees are estimated to be undocumented. Undocumented workers are entitled to workers’ compensation benefits in thirty-eight states, and many states place certain restrictions on whether or not undocumented workers can get benefits, or under what circumstances.

In addition, I pointed out an earlier post I wrote about Mexico as a destination for medical tourism for Mexican-born US workers, and I believe that as this issue gets closer to being solved, the likelihood will increase, that injured workers from Mexico and other countries in Latin America and the Caribbean, as well as native born American workers’, will travel to medical tourism destinations in the region, provided the workers’ compensation industry goes along with it.


You would not think that technology has anything to do with the future of medical tourism, but then you would be a modern day Luddite. Technology is revolutionizing many facets of life, and health care is a part of that. Electronic medical records, advances in imaging systems, and a host of other medical devices are changing the way health care is delivered.

But there are other ways technology is changing health care, and that will have a profound effect on medical tourism. In my White Paper on the barriers to implementing medical tourism into workers’ compensation, I mentioned several laws that prevent physicians from consulting with patients through the internet or over the phone. This may seem silly given the communications revolution, but it is a product of what happens when technology outstrips the laws we enact.

But the invention of the pc, tablet and the smartphone means that doctors and patients can be far away, and yet be in touch, and more importantly, doctors can access your medical records and consult with other physicians through such devices. A blog I follow recently reported on these devices and how they will make a visit to the doctor not just a personal one, but a virtual one. I re-posted this to my blog last week

What this will mean for medical tourism is that before a patient goes abroad, either the patient or their local physician will be able to discuss the case with the physician at the medical tourism facility, and that the physician overseas will be able to access the patient’s records while consulting with the patient or the local physician.

This will provide confidence to the patient that the treating doctor understands the patient, knows what treatment they are seeking, and will assure that the patient will have a better experience than if they simply went to the facility without first having any contact with the treating physician. It will also mean that both physicians can collaborate on treatment and aftercare, so that the patient can have a positive outcome. Medical tourism facilitators, insurance companies and even employers will be aware that the patient’s needs are being met because of the ease of communication technology provides.

Some observations on the current state of the medical tourism industry

Before I conclude this discussion of the future of the medical tourism industry, I’d like to make a few observations that have concerned me for some time, and that must be addressed if the future of the industry is to be a bright and rewarding one for all participants.

I am well aware that the medical tourism industry is still, as some have called it, a “cottage industry”. But it is a growing industry, and one that can ill afford to have petty jealousies, petty politics, and downright nastiness as a way of doing business. I am aware of individuals and organizations who have acted in less than honorable ways that cause more harm to the industry as a whole than it does to their own reputations. One can only imagine if other industries acted this way, where they would be, both financially and organizationally.

There are nearly seven billion people on this planet, and while it is likely not all of these seven billion will ever leave their home countries for medical care, the millions that will deserve a medical tourism industry that works harmoniously for the benefit of all patients. It is incumbent upon the medical tourism industry to act like responsible adults and treat each other with respect and cooperation, rather than with enmity and suspicion. There is plenty of business for all involved, so that the term “cut-throat competition” should not be taken literally.

Another observation I want to make is lack of transparency on costs of surgical procedures. Earlier this year, I wrote about some of the hospitals and clinics in the Caribbean and Latin America region from marketing brochures I got from the 5th World Medical Tourism and Global Healthcare Congress in October 2012. In trying to get more information for specific hospitals in some of these countries, I have had no success in getting information from the contacts I made at the Congress, or from individuals I have connected with through social media.

If medical tourism is to be taken seriously as an alternative to higher medical costs, especially here in the US, and more specifically, with regard to costs for workers’ compensation injuries requiring surgery, knowing how much a knee operation in Mexico, Costa Rica, Guatemala, Brazil, or other regional destinations, costs is very important. In light of the recent revelations by CMS of hospital charges in the US, where for example, spinal fusions range anywhere from $19,000 to more than $470,000, medical tourism destinations should be more than willing to produce an up-front range of costs for these and other procedures. This will go a long way to making medical tourism more open to all. Also, it will allow comparisons to be made, so that the choice to implement medical tourism into workers’ compensation can be made by employers, insurance companies, third party administrators, and maybe even the patients themselves, if provided with sufficient data to consider.

Transparency and a more cooperative and non-adversarial industry culture will mean that medical tourism will not just be a niche market, but a viable alternative for medical care. If I want to know how much a knee replacement or repair costs in Argentina, Brazil, Costa Rica or anywhere else in the Caribbean and Latin America region, so I can compare them to costs for the same procedure in the US, India, Singapore or Thailand, I should be able to do so easily, without having to go through hoops to get them.


The future of the medical tourism industry depends upon many factors, some it can control, and others it cannot. My purpose here was to try to examine some of the factors that the industry does not control and that may have a positive impact on the industry in the next five to ten years.

We examined the issue of the cost of medical care from its various components. We saw that hospital costs, outpatient costs, the consolidation of hospitals and the cost to employees are all going to impact the future of medical tourism.

We also looked at the likelihood that immigration reform in the US could mean that medical tourism may one day be implemented into workers’ compensation as more undocumented workers achieve legal status and can opt for treatment in their home countries if injured on the job.

And finally, we looked at where technology was going and how it will be possible for medical records and information to be transmitted through smartphones, making it more likely that medical tourism will be a viable option and that the treatment a patient receives is based on the most up-to-date medical records available.

So in closing, I think the future of the medical tourism industry is a bright one, so long as the industry can come together and work out its problems and can expand beyond being a rich man’s game. The other factors I mentioned above will only be important once the industry has shaken off its past and holds its head up high and steps up to the plate to provide better quality healthcare at lower prices for all patients, individuals, group health plan members and injured workers.


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