IMPORTING COMPETITION

August 20, 2008

Health care has long seemed one of the most local of all industries.  Yet beneath the bandages, globalization is thriving.  The outsourcing of record keeping and the reading of X-rays is already a multi-billion-dollar business.  The recruitment of doctors and nurses from the developing world by rich countries is also common, if controversial.  The next growth area for the industry is the flow of patients in the other direction -- known as "medical tourism"-- which is on the threshold of a dramatic boom, says the Economist.

Tens of millions of middle-class Americans are uninsured or underinsured and soaring health costs are pushing them and cost-conscious employers and insurers to look abroad for savings.  At the same time the best hospitals in Asia and Latin America now rival or surpass many hospitals in the rich world for safety and quality:

  • On one estimate, Americans can save 85 percent by shopping around.
  • The number who will travel for care is due to skyrocket from under 1 million last year to 10 million by 2012 -- by which time it will deprive American hospitals of some $160 billion of annual business.

If medical tourism is to live up to this promise, several barriers must first be swept away, says the Economist:

  • In parts of America arcane restrictions still forbid out-of-state doctors from consulting with patients on the internet or by phone, which inhibits follow-up care for medical tourists.
  • Legal and insurance barriers make it hard for employers to give employees a financial incentive to choose medical tourism over local options -- even though insurers are allowed to offer such incentives to prompt patients to pick cheaper doctors inside America.

Source: "Importing competition: The coming boom in medical travel could help both rich and poor," The Economist, August 14, 2008.

For text:

http://www.economist.com/opinion/displaystory.cfm?story_id=11920756

 

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