Self Funding & Medical Tourism: What Does One Have to do With the Other?
For the past few years, the World Medical Tourism & Global Healthcare Congress (WMTC) has integrated with the Employer Healthcare & Benefits Congress (EHBC). The purpose of this integration is to open up opportunities for both medical tourism professionals and U.S.-based employers, and all the players in between, to realize the variety of ways they can work together.
The EHBC is host to many self-funded employers from across the United States. These are employers that cover the healthcare costs of their workforce without relying on an insurance company. The employer assumes the risk for payment of the claims for benefits.
One self-funded employer sat down with Medical Tourism Magazine (MTM) at last year’s conference to talk about his experience with implementing medical tourism into the company’s health plan.
Back in 2007, Jack Norton, Director, Health Plan for Blue Lake Rancheria, heard a radio broadcast about a man who needed a triple bypass. His choice was clear, he was either going to go bankrupt or pass away. But instead, that man made the decision to travel to Thailand for his life-saving procedure.
“After hearing that story I thought, wow, if this guy can do it, why can’t we do it and save money on our health plan,” said Norton. “I actually snuck into the very first WMTC in San Francisco, I listened to a few of the presentations and figured out how to get started.”
Norton is in charge of the health plan at Blue Lake Rancheria, located in a very rural area of Northern California where access to high-quality health is not always available. Since they began offering medical tourism as an option for healthcare, Norton has seen some significant savings. Here are just a few examples:
- The average savings per medical treatment on a gross basis has been realized at 75 percent reduced cost per procedure.
- The net savings after expenses are satisfied for those individual cases is 57 percent
- The total medical expenditures for the year have experienced a 10 percent reduction
Since the implementation of the medical tourism plan at Blue Lake Rancheria, they have had seven cases to date. There are approximately 320 covered individuals on the plan including both members and dependents. The average age is 32 years old. Norton said that they are a reasonably healthy group, which keeps medical expenditures low compared to the average.
Normally, out of all their members, they have about four surgeries per year, with no more than two cases exceeding $50,000 for a single year. This year, Norton shared that they are looking to having three out of the four take advantage of the international travel benefits.
The concept of traveling abroad for a medical procedure and combining it with a vacation at no extra cost to the employee is attractive, yet, employees are apprehensive to travel. For employers that want to implement or have already implemented medical tourism, introducing the employees to the idea can be difficult.
At Blue Lake Rancheria, employees first learn of the medical travel option during their benefits orientation. They watch a video featuring an employee who traveled to France for a procedure through the travel benefits program.
Here, they are informed that when an employee actually needs the service, and the TPA sends out the letter of authorization for medical treatment, a company letter is sent out detailing the medical travel benefit to the employee. Co-pays are waived, as well as deductibles, and all travel expenses are covered for the patient and companion, including passports and lodging.
“For us, it’s a strategy to increase the quality of care and reduce the cost. You get the best of both worlds,” said Norton. “We are in a rural area so access to world-class medical care isn’t readily accessible — it’s a five-hour drive. So, if they take a seven or ten-hour flight, have a co-pay and deductible waived, it’s a natural incentive for employees to be interested,” he added.
Getting Self-Funded Employers Interested
Even though the idea of saving money may be appealing, often times it is not enough to get employers interested. There are a variety of factors that they consider and at times they are still reluctant.
Tom McDonald, Business Development Director for Willis Towers Watson, who also spoke at the WMTC, told MTM that risk of procedure complications, post-care concerns, quality and legal liability are some of the major concerns holding individuals back. On the other hand, employers realize that the medical travel benefit is not for everyone.
Part of what Willis Towers Watson offers is to serve as an HR consultant to a broad range of employers.
“For the many companies that could greatly benefit, the experiences of early adopters needs to be at the center of ongoing informational and educational campaigns,” said McDonald. McDonald has started sending proposals to different countries around the world in an effort to market their medical provider services to self-funded employers in the U.S.
According to McDonald, Willis Towers Watson decided to start sending proposals like this in order to leverage the double-sided revenue model. In addition to self-funded U.S. companies investing in global provider networks to reduce costs, there is an opportunity to market foreign health providers directly to U.S. firms.
“I think that the future of this concept depends on the success and ROI achieved by these early trial efforts,” said McDonald. “With that said, it should follow the general trends in medical tourism as comfort levels increase along with experience. Generally, this is believed to be a 20 percent or more annual growth,” he added.