The cost of medical care in the US has been the most expensive in the world for decades. It is the sole reason that the country is now struggling with government controlled or mandated medical care. The reasons for the high cost of care are several. Here are a few: The fear of malpractice suits, increasingly costly technology, government control of half the US medical sector (that’s before the Affordable Care Act), and the lack of price competition. The second of these can be instantly dismissed. You are reading this on a computer or its like. The power of computers has increased exponentially over the past 30 years while the cost of computers has fallen to the same degree as their power has risen. Medical technology has increased in cost as its power increased solely because there is no price competition in medicine. There is no incentive to keep costs down. In fact, every incentive in our system is to raise costs. If an MRI had been subjected to the same forces that a personal computer has been, a scan would cost $100.
Medical expenditure per capita – click to enlarge
One of the unanticipated consequences of the ACA, of which there are already many, is likely to make many Americans into medical tourists. Medical tourism simply stated, is the obtaining of elective medical care in a foreign country where the cost of service is much cheaper than in the patient’s own country. Medical tourism will also arise if the service is not available or is not promptly available. If Americans realize that their medical insurance is expensive and its deductible amounts high, they may find it cheaper to travel to another country for whatever medical service they need. In practice the the issue is much more complicated than it may appear at first glance. The quality of care, the laws of the country where the service is delivered, the true cost of care after travel expenses are added, and follow-up care are all issues that must be considered before deciding to go abroad for medical treatment.
Lunt, et al of the University of York have written a review on the topic for the Organisation for Economic Co-operation and Development – Medical Tourism: Treatments, Markets and Health System Implications: A scoping review. They state that “Whilst there is an increasing amount written on the subject of medical tourism, such material is hardly ever evidence-based. Medical tourism introduces a range of attendant risks and opportunities for patients.” The entire report is appended below.
A few comparisons will show why patients from the US might want to travel to Thailand for a variety of procedures. The cost of a heart bypass operation in the US is $113,000; in Thailand it’s $13,000. Hip replacement is $$47,000 vs $12,000. These data are taken from page 12 of the report below. They do not include the cost of travel and lodging.
The obvious first question is how good is the care in Thailand? I have trained scores of Thai physicians over the years and they have all been first rate. There may be a selection bias as only the best students may have been sent to the US for post-graduate education. I have been a visiting professor in Thailand several times and the facilities I saw were also first rate; again there’s the problem of selection bias. Today, Thailand is the number one destination for medical tourism. The US, which used to be first, is now third.
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How ACA will eventually play out is impossible to predict. But you can be sure that it will be different from the way it was intended to be. Its effect on doctors, practice patterns, hospitals, and the ease and cost of medical care will be immense. Medical tourism is an uncertain business and available only to the relatively affluent. But investors see a large potential profit in it. Below is a report for potential investors in Bumrungrad Hospital in Bangkok. The hospital seems to be a cutting edge facility. Its target population does not seem to include the US, but that may change as the ACA transforms American medicine. The hospital’s physicians seem to be largely trained in the US, the UK, and Australia and are board certified in those countries.
Obviously this hospital is at the top of the heap of those in Thailand, or any other country for that matter, and is not representative of the whole. The best medical centers in the US cannot be topped, but only a small handful of Americans are treated at these centers. How can Bumrungrad provide first rate care and make enough of a profit to be attractive to investors? To start with, they don’t have to deal with insurance companies or the government. Third party payers add about 40% to the medical bill. They also don’t have the malpractice burden that the US has. Their cost of labor is lower than here. By sending their best students to the US they export the cost of post-graduate education to us. Medicare pays for most of residency and fellowship training in the US.
I wouldn’t be a medical tourist, nor would I recommend that other Americans go abroad for medical care. But the example of a medical center like Bumrungrad neatly demonstrates why medical costs are so high in the US and why any government program, no matter how carefully crafted, will not solve the cost problem in theUS.
Bumrungrad Hospital investors presentation pd
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