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Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Medical Tourism Lowers Healthcare Costs for Companies and Their Employees, But Is It Good Medicine for Patients and Can Clinical Laboratories Participate?

Some companies save so much in healthcare cost they pay their employees to participate in medical tourism programs

Medical tourism is not new, but it’s changing, and clinical laboratories have a role to play in the models employers use to save money on their employees’ health coverage costs.

Employers that manage the entire process—from securing passports for their employees, to ensuring they have access to high-quality care outside the country’s borders—report saving money as well as simplifying the process for their employees. An apparent win-win.

However, questions linger about:

  • Availability of diagnostic testing and clinical laboratories;
  • If patients treated outside the US receive adequate protections; and
  • Whether the quality of care is equal to that in the US.

One recent example of a company helping employers and employees receive high quality care outside of the US is NASH—the North American Specialty Hospital. NASH was featured in a Kaiser Health News (KHN) article that described one patient’s experience traveling to Cancún for a surgical procedure.

Location, Pre-Existing Conditions, Length of Stay, Etc., Affect Final Bill in US

One of NASH’s corporate clients is Ashley Furniture Industries. Headquartered in Arcadia, Wis., the American home furnishings manufacturer and retailer employs approximately 17,000 people, including Terry Ferguson. Terry’s wife, Donna, is the patient highlighted in the KHN story.

One of the healthcare providers NASH partners with is Galenia Hospital, a 55-bed general services hospital in Cancún, Mexico. NASH leases the entire third floor of the hospital. Galenia is next door to a Four Points Sheraton Hotel, making lodging a simple matter for medical tourists.

Currently, NASH focuses on orthopedic surgeries such as total knee replacements, the medical procedure Donna Ferguson underwent.

A 2015 BlueCross BlueShield study showed that costs for total-knee-replacement surgery in the US averaged about $31,000. However, depending on where the surgery takes place, it can cost as low as $11,317 (Alabama) and as high as $69,654 (New York City). Pre-existing conditions, length of time in the operating room, number of days in the hospital, and numerous other factors contribute to the final bill.

NASH, however, sets the final price is up front.

Some Companies Pay Their Employees to Use Medical Tourism

With the average cost for the surgery coming in at around $12,000, the cost savings to employers is so great some companies actually pay employees who are willing to travel for procedures, KHN reported. Donna Ferguson paid no co-pays for her surgery, paid nothing out of pocket for travel or lodging while in Cancún, and the Ferguson’s received a $5,000 check from Ashley Furniture.

Ferguson told KHN, “It’s been a great experience. Even if I had to pay, I would come back here because it’s just a different level of care—they treat you like family.”

That’s important for hospitals, clinical laboratories, and all healthcare providers in America to consider. In the minds of patients, quality of care starts with their experience at the hands of the provider.

Donna Ferguson (center) is shown above meeting Thomas Parisi, MD, JD (left), a surgeon with the Orthopedic Institute of Wisconsin, for the first time in Cancún the day before he performed her knee replacement surgery. Clinical laboratory tests, X-rays, and other diagnostics took place in the US prior to Ferguson’s authorization to undergo surgery in Mexico. (Photo copyright: Rocco Saint-Mleux/KHN.)

Clinical Laboratory Tests in US, Surgery in Mexico

Prior to traveling outside the US for surgery, Ferguson underwent a physical exam, X-rays, and other diagnostic testing to ensure the treatment approach was the best for her. Once that was confirmed, IndusHealth, Ashely’s medical travel plan administrator, “coordinated [Donna’s] medical care and made travel arrangements, including obtaining passports, airline tickets, hotel and meals,” for both Donna and Terry Ferguson, KHN reported.

It seems reasonable to assume that NASH has agreements with multiple clinical pathology laboratories and healthcare facilities throughout the US for patients to get the tests they need prior to surgery. Partnerships with medical tourism companies may well represent an avenue for pathology laboratories to pursue.

Protections for Patients

So, why hasn’t medical tourism become the healthcare juggernaut some experts predicted? Managed Care suggests one reason is that Americans tend to be skeptical of the quality of care they will receive in a foreign facility.

“Building a familiar culture in a foreign destination may be appealing to some American consumers, but I do not see it as a sustainable business,” Health consultant Irving Stackpole, PhD, MEd, Psychology, told KHN. “It’s not unusual for people thinking about this to have doctors, family, and friends who will see this as a high-risk undertaking.”

Several factors helped Ferguson feel better about her decision to travel to Mexico for surgery. One is that Galenia is credentialed.

Managed Care notes, “A number of organizations credential international facilities. The American Medical Association guidelines for medical tourism recommend that foreign medical providers have accreditation from the Joint Commission International or a similar organization.”

Galenia Hospital has accreditation from the Joint Commission International, the General Health Council of Mexico, as well as diamond-level accreditation from Canada’s Qmentum International Accreditation Program.

In addition to a credentialed facility and a highly trained surgeon, NASH also provides US malpractice insurance coverage, giving patients recourse in the event something goes wrong. Ferguson and American patients like her would be able to sue in the US if care under this arrangement was not successful.

Medical Tourism Pays Surgeon’s Full Fee

One fascinating twist in this story is that an American physician was flown to Cancun to perform this operation and was paid his full fee. The surgeon scheduled to perform Ferguson’s operation, Thomas Parisi, MD, JD, trained at the Mayo Clinic. He traveled from Wisconsin to Cancún to perform the procedure. “Dr. Parisi trained at Mayo, and you can’t do any better than that,” Ferguson told KHN.

KHN reported that Parisi spent less than 24 hours in Cancun and was paid $2,700 for this surgery. That fee is three times of the amount Medicare pays for this procedure. Further, Parisi’s fee was significantly above what many managed care plans would negotiate for this type of surgery.

American-trained physicians are common at many of the facilities credentialed by the Joint Commission International. “Many overseas hospitals are staffed in part by physicians and other health professionals who were trained in US hospitals. One hospital in India has 200 US-trained board-certified surgeons,” wrote James E. Dalen, MD, MPH, ScD, and Joseph S. Alpert, MD, in “Medical Tourists: Incoming and Outgoing,” published in The American Journal of Medicine (AMJMED).

“In the past, medical tourism has been mostly a blind leap to a country far away, to unknown hospitals and unknown doctors with unknown supplies, to a place without US medical malpractice insurance. We are making the experience completely different and removing as much uncertainty as we can,” James Polsfut, CEO and Chairman, North American Specialty Hospital (NASH), told KHN.

Clinical laboratories in America may find opportunities providing testing services to medical tourism organizations like NASH. It’s worth investigating.

 —Dava Stewart

Related Information:

To Save Money, American Patients and Surgeons Meet in Cancun

Blue Cross Blue Shield Association Study Reveals Extreme Cost Variations for Knee and Hip Replacement Surgeries

Understanding Knee Replacement Costs: What’s on the Bill?  

NASH Self-Pay Medical Tourism

Medical Tourism: Once Ready for Takeoff, Now Stuck at the Gate

Medical Tourists: Incoming and Outgoing

Medical Tourism Continues to Flourish as U.S. Patients Seek Lower Cost Healthcare in Overseas Countries

Healthcare Reform in the United States May Actually Increase Medical Tourism

Utah Public Employees Receive Transportation and a $500 Cash Bonus to Purchase Prescriptions in Mexico

Walmart Flies Employees to Top Hospitals for Surgeries in a Bid to Cut Healthcare Costs

Direct Primary Care a New Option for Patients to Receive High-Quality Medical Care at Affordable Prices

Medical laboratories prepared to receive direct payments for services rendered will have an advantage as more physicians’ practices convert to concierge medicine and stop taking insurance or Medicare

A growing number of physicians are looking at new care delivery models as increasing costs and narrow networks drive patients into high-deductible health plans (HDHPs). These can include concierge medicine and direct primary care. Clinical laboratories and anatomic pathology groups will need to  adapt to these new models of healthcare.

Concierge medicine is basically an alternative medical practice model. Its main benefit is providers see far fewer patients and can provide higher-quality care to patients who can afford to pay the fees. Dark Daily reported on this growing trend as far back as 10 years ago (see, “More Doctors Consider Concierge Medicine as Healthcare Reform Looms,” June 8, 2009), and as recently as this year (see, Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories, April 23, 2018.)

Now, a new payment program called Direct Primary Care (DPC), which is emerging as an alternative to traditional health insurance plans, could further help patients in HDHPs—and the uninsured—afford quality healthcare.

The main difference between DPC and concierge medicine lies in how doctors get compensated. Monthly membership fees are usually the only source of revenue for DPC practices and they do not accept any type of insurance. Concierge practices, on the other hand, bill insurance companies and Medicare for covered medical services and collect membership fees for services that are not covered.

In general, if a third-party payer is not involved, the practice is considered Direct Primary Care.

DPC versus Concierge Medicine: How Do They Compare?

Direct Primary Care is an offshoot of concierge medicine and the two terms are often used interchangeably. Although similar, there are distinct differences between the two models of care.

Concierge medicine was created in the mid 1990’s and was originally used by wealthy patients who were willing to pay a high subscription fee for access to select physicians. However, this model has changed over the years, making concierge medicine economically available to lower income individuals as well.

According to Concierge Medicine Today, the majority of concierge medicine plans cost between $51 and $225 per month in 2017. Eleven percent of concierge plans charge less than $50, and 35% cost more than $226 per month. There are some high-end concierge plans that can cost upwards of $30,000 per year.

Direct Primary Care was started in the mid 2000’s as an insurance-free plan mainly for the uninsured. In 2015, the Journal of the American Board of Family Medicine reported that the average monthly cost for patients on a DPC plan was $93.26 among the 116 practices they surveyed. The range in costs at that time was $26.67 to $562.50 per month. They also found that practices that identified themselves as “Direct Primary Care” charged a lower fee on average than concierge practices.

The patient base also varies between the two types of practices. According to Cypress Concierge Medicine in Nashville, Tenn., DPC physicians usually treat younger patients with an annual household income of less than $50,000, while concierge medicine doctors typically treat patients over the age of 45 who have an annual household income of $75,000 or more.

Physicians in both plans try to limit the number of patients they serve to a few hundred to ensure they can provide the best possible care to their clients.

Physicians Like Direct Primary Care Programs

DPC physicians charge a monthly membership fee for their services based on the patient’s age, the type of practice, and the number of individual family members on the DPC plan. The monthly fee includes routine office visits—usually with no co-pays—and almost constant access to a physician through telemedicine technology.

DPC plans also provide same or next-day appointments for members and offer lower costs for pharmaceuticals and lab tests.

Direct Primary Care programs are attractive to physicians who often feel overworked by too many patients, too much tedious paperwork, too much time dealing with insurance companies and too little time to provide quality care.

“There are thousands of physicians in career crisis who are investigating new ways to practice medicine and in essence, love going to work again,” noted Michael Tetreault, Editor-in-Chief of The DPC Journal.

“I can understand why [direct primary care] would be appealing to some family physicians,” Dennis M. Dimitri, MD (above), Professor and Vice Chair of Family Medicine and Community Health at UMass Memorial Medical Center and President of the Massachusetts Medical Society, told the Boston Globe. “Many doctors feel terribly burdened by the administrative issues of dealing with insurers, referrals,” he stated. “They are unhappy that all of that gets in the way of them having sufficient time to help their patients the way they want to.” (Photo copyright: Massachusetts Medical Society.)

Jeffrey Gold, MD, a Family Practice specialist in Marblehead, Mass., left his position with a successful physicians group to launch his own DPC practice.

“It’s really blue-collar concierge medicine,” Gold told the Boston Globe. He added that his former practice model “was all about volume and coding and how many people a day you can see.”

“I couldn’t do it anymore,” he admitted. “It was not aligned with how I grew up thinking about medicine.”

DPC/Concierge Practices Expected to Increase in Numbers

With a growing number of patients in high-deductible health plans, concierge medicine and DPC practices are expected to increase in number. According to Direct Primary Care Frontier, an online resource that supports DPC, in 2014 there were only 125 DPC practices in the US. However, by April of 2017, that number had jumped to 620, and as of March 2018, the estimated number of DPC practices was 790.

Similarly, in 2010, there were between 2,400 and 5,000 concierge medical practices in the US, and by 2014, that number had increased to 12,000, according to the American Journal of Medicine.

Like concierge medicine, Direct Primary Care clients present a relatively new method for clinical laboratories to succeed and be profitable. Because there is no need to be in insurance networks—and patients pay cash for lab tests—DPC patients may prove to be an excellent source of business for medical laboratories that can adapt to DPC practices.

—JP Schlingman

Related Information:

A New Kind of Doctor’s Office That Doesn’t Take Insurance and Charges a Monthly Fee is ‘Popping up Everywhere’ and That Could Change How We Think About Healthcare

Medicine vs. Direct Primary Care

Direct Primary Care and Concierge Medicine: They’re Not the Same

4 Distinguishing Differences Between Direct Primary Care and Concierge Medicine

Direct Primary Care: Practice Distribution and Cost Across the Nation

List of What Worked and Didn’t in DPC from 2016

How These Doctors Bypass Insurance Companies

Concierge Medicine is Here and Growing!!

More Doctors Consider Concierge Medicine as Healthcare Reform Looms

Some Hospitals Launch Concierge Care Clinics to Raise Revenue, Generating both Controversy and Opportunity for Medical Laboratories