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Reverse Medical Tourism in the U.S; Opportunity for Lower Cost Surgery

Posted Jun 22 2012 12:00am

I have blogged extensively about medical tourism  in the past. A recent note in the excellent blog Marginal Revolution by economist Alex Tabarrok taught me some things that I did not know (see: Medical Tourism ). I reproduce his note below in its entirety. If you pursue some of the lower cost surgery options mentioned, be sure to factor the quality of care into your decision. ---BAF

We have all heard about medical tourism to India, Singapore or Thailand, places where patients can enjoy high quality and low prices. But do you know about medical tourism to the United States? By some estimates, around 400,000 people travel to the United States for medical treatment every year and the big surprise is that for tourists U.S. health care prices can be very low! Canadians coming to the United States can get a knee replacement for less than half of what Americans pay and at a price not much more than they would pay in India. I learned this from John Goodman’s very interesting new book, Priceless: Curing the Healthcare Crisis  (this is an Independent Institute book where I am director of research).

Nor is that the end of the story. Here is Goodman on an even more surprising twist:

Moreover, you do not have to be a foreigner to benefit from domestic medical tourism. Colorado-based BridgeHealth International offers US employer plans a specialty network with flat fees for surgeries paid in advance that are 15 percent to 50 percent less than a typical network. North American Surgery, Inc. , has negotiated deep discounts ["for the uninsured, under-insured, and self-insured"] with 22 surgery centers, hospitals and clinics across the United States as an alternative to foreign travel for low-cost surgeries. As noted, the “cash” price for a hip replacement in the network is $16,000 to $19,000, making it competitive with facilities in India and Singapore.

One reason why so little is known about the domestic medical tourism market is that hospitals prefer that most of their patients not know about it. The reason: they are often offering the traveling patient package prices not available to local patients. That occurs because the hospital is only competing on price for the patients who travel.

To be sure, the prices paid in the “travel” market are probably closer to marginal prices than average prices. Nevertheless, I think Goodman is absolutely right to focus in on the sectors of the health care economy which are competitive, it is in these sectors that we see listed prices, falling costs and increasing quality. Priceless is about how we can expand the competitive sectors. More on the book here .

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