Outsourcing health care

As the word spreads about the high-quality care and cut-rate surgery available in countries such as India, Thailand, Singapore and Malaysia, a growing stream of uninsured and underinsured Americans are boarding planes not for the typical face-lift or tummy tuck, but for discount hip replacements and sophisticated heart surgeries.

What may accelerate the trend is that some pioneering U.S. corporations, swamped by rising health-care costs, are taking a serious look at medical outsourcing:

Procedures in Thailand and Malaysia cost only 20-25 per cent as much as comparable ones in the United States; top-notch Indian hospitals sell such services at an even steeper discount.

To cater to an international clientele, many private hospitals abroad are applying for accreditation (many of them successfully) from the Joint Commission International, the global arm of the institution that accredits most United States hospitals.

"This has the potential of doing to the United States health-care system what the Japanese auto industry did to American carmakers," says Princeton University Healthcare economist Uwe Reinhardt.

Will U.S. insurers join the party? According to Mhoit Ghose of the trade group America's Health Insurance Plans, many have taken note of medical outsourcing but are scared off by the regulatory and legal uncertainties. Yet as the medical-cost crisis deepens, the corporations who pay insurers are likely to find the lure of outsourcing as irresistible in health care as it is in software.

Source: Unmesh Kher et al., Outsourcing Your Heart, Time, May 29, 2006.

For text: http://www.time.com/time/archive/preview/0,10987,1196429,00.html

For more on Health: http://www.ncpa.org/iss/hea/

FMF Policy Bulletin/ 20 June 2006