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WellPoint Invests In Medical Tourism

From the AIS Report on Blue Cross and Blue Shield Plans: 
"WellPoint's pilot program, called the Global Health Care Partnership, will allow employees of Serigraph to access benefits for certain common elective procedures at designated facilities in India starting in January 2009. Serigraph, a Wisconsin-based printing company, has 650 U.S. employees. The procedures include major joint replacement and upper and lower spinal fusion. "The U.S. retail price for knee replacement surgery is approximately $70,000, while the same procedure costs approximately $8,500 in India," says Razia Hashmi, M.D., chief medical officer for WellPoint's national accounts." (emphasis mine.)
Providers ignore this trend at their own peril and, in my experience, most are paying scant attention.  Insurers like WellPoint are focusing these programs around the few high-margin services providers have left.  They're content to leave onshore all the unprofitable diagnoses - the sepsis and pneumonia, the ER and obstetrics - until there are better, cheaper options for them too.  And it doesn't take too many high-end procedures - ortho, neuro, cardiac, transplants - moving overseas before hospitals' already-dwindling profit margins disappear entirely.

My advice: stop worrying so much about the competitor down the street or across town.  You've spent years battling back and forth...and after all that, how much market share have you really gained or lost?  If you're livin' large on high-end surgery, the real threat may be in Bangalore.

Along the way you'll undoubtedly hear comments like "Oh, OUR patients LOVE us.  They'd NEVER fly half-way around the world to a strange country for major surgery..."   I hope you're right.  (And for your organization's sake, you'd BETTER be right.)  But exactly how many high-margin cases can you lose before you're below water?  Here's 61,500 reasons ($70,000 - $8,500) to find out.

I have some thoughts on how to approach the analysis; contact me and we'll discuss.

More on medical tourism from Deloitte, including a forecasted increase in patients traveling overseas for care from 750,000 in 2007 to 6 million in 2010.


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