Hospitals and brokers both areslowly coming to understand that bundling services and providingdirect contracting can help hold the line on costs, attractingpatients and employers. (Photo: Shutterstock)

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Medical tourism, a practice that showed great promise ten years ago, is drawingattention from employers again—but the focus is now on traveling inthe U.S. to high-quality, high-volume medical facilities.

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Part one of this series looked at the history of medical tourism and how it wasaffected by the passage of the Affordable Care Act (ACA) in 2010.This article will look at how the industry has adapted to changesin the marketplace, and how employers are once again experimentingwith the concept as a cost-saving measure.

Shifting the focus

The demand for traveling to surgical centers in other countrieswas growing a decade ago, when pre-existing condition clauses and otherinsurance exclusions meant that some Americans had to look outsidethe U.S. health system for certain medical procedures. Someemployers and insurers launched programs to cater to this market. Medical tourism companiessprang up, anticipating continued growth in demand.

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Related: Startups giving a boost to medical tourismindustry

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But with the passage of the ACA, most of the U.S. coverageexclusions were no longer allowed. The demand for overseas caretook a hit. In an article in Managed Care, Rajesh Rao, who ran a hospitalnetwork specializing in overseas medical tourism, says interest inhis network dropped sharply after the passage of the ACA. “And assoon as the ACA went into effect, all those discussions stopped,”he says.

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Leigh Turner, PhD, a professor of Bioethics at the University ofMinnesota, says that in the long run, many of the medical tourismstartups may have simply found the process too complicated toreally build a profitable business around. “A decade ago there wasthe idea that this was a can't-lose business proposition,” he says.“But it turned out to be quite difficult to scale up. The challengeof medical tourism was that it's a bit like being a tour operator;it can be fairly expensive and involved. It was an interestingmodel but it hasn't had a huge uptake with insurers oremployers.”

The rise of domestic medical tourism

The medical tourism concept, however, still had fans. Theyargued that the cross-border options, with longer travelrequirements, language barriers, liability questions, and otherissues might not be for all patients—but traveling for quality carein the U.S. still made sense.

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“It's easier to convince employees to travel to a differentstate, than to travel to a different country,” says Renee-MarieStephano, president of the MedicalTourism Association. “Domestically, medical tourism is nowfocused on centers of excellence. We're seeing is this trend ofengagement by employers to provide a better level of care.”

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In this model, companies offer employees the programs that helppay for travel expenses to centers of excellence—hospitals such asJohn Hopkins or Mayo Clinic—that perform high volumes of the neededprocedures. As this article in D Magazine explains, high volume, high qualitycenters can deliver care that results with fewer complications andre-admissions, two things that increase health care costs.

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Direct contracting with centers-of-excellencesteers patients to hospitals that provide high-quality care and arewilling to discount their prices in exchange for the higher volumeof patients,” writes Steve Jacob. “Typically, hospitals arescreened based on quality, using data to show that their clinicaloutcomes and patient satisfaction exceed a threshold defined by thepurchaser. Then purchasers negotiate a single price for servicesassociated with a procedure.”

A new solution: direct contracting

But nationally known brands such as Mayo or Cleveland Clinic arenot the only options for employers interested in this approach.“Really the goal is to identify high quality networks and getbetter access to services,” Stephano says. “There are lesswell-known brands that are delivering amazing clinical expertise.”She notes that Mercy Health, based in Springfield, Mo., is one ofseveral medical centers that Wal-Mart has contracted with toprovide employees around the country with orthopedic surgicalprocedures. “They've been able to bring the cost of services downby negotiating prices. Really, it's based on value, whether [careis] domestic or international.”

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Stephano says that hospitals and brokers both are slowlycoming to understand that bundling services and providing directcontracting can help hold the line on costs, attracting patientsand employers. ”Brokers and clients are looking to obtain newclients, and how do you do that in a market where the cost ofhealth care is not going down?” Stephano asks. “You have to be ableto provide some creative solutions that are going to add value forthat employee pool.”

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The learning curve on medical tourism is still a challenge thather group works with, Stephano says. “For the most part all of theperceived obstacles have been overcome,” she adds. “Now it's just amatter of the education process, getting more brokers to understandthe value of medical travel and direct-contracting.

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“They've already been direct-contracting with local hospitals,”she continues. “We just need to help them understand that medicaltourism is also direct contracting.”

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