2005 October 02 Sunday
Medical Tourism Seen As Growth Industry

Some medical tourists save two thirds of the costs for procedures that cost tens of thousands of dollars in the United States.

Bradley Thayer, a retired apple farmer from Okanogan, Wash., traveled 7,500 miles to get his torn knee ligament fixed, and says he paid a third of what it would have cost him in a U.S. hospital. And that included air fare to Bombay.

Thayer was uninsured when he suffered his injury. If more people paid their medical costs out of pocket then more would shop around and even go abroad for treatment. Insurance decreases competition in medical services. Wider use of tax-advantaged medical savings accounts therefore would increase competition and drive down prices in health care.

The article quotes patients saying that Indian doctors provide more information and their phone numbers to call for questions.

Thailand leads in the medical tourism market but India's business is growing.

India is still a relative newcomer to the international medical market, attracting 150,000 foreign patients last year, compared with Singapore's 200,000 and Thailand's 600,000. But India's numbers are increasing. In Jaslok, one of Bombay's top private hospitals, three Americans were recovering from orthopedic surgery in June alone.

IVF in India costs only an eighth the cost in the US.

In vitro fertilization can cost $20,000 in the United States and $15,000 in Europe. In India it costs about $2,500.

Medical tourism is easier for medical conditions that are less debilitating. This puts an upper limit on medical tourism. Also, people in the United States who are old enough to quality for government-funded Medicare have little incentive to look abroad. Plastic surgery might be a better bet for growth in medical tourism because for most people plastic surgery is both optional and paid out of pocket. However, due to its optional nature and the fact that insurance companies rarely cover its costs plastic surgery is probably already the most competitive type of surgery in the United States.

I would expect the medically uninsured to be the biggest customers of medical tourism. Will insurance companies eventually start providing their customers with monetary incentives to seek treatments abroad?

Travel distance is another obstacle for medical tourism. This provides an opening for Mexico. The Mexican government ought to allow doctors from South and East Asia to come in on work visas to set up hospitals and clinics to serve US customers. That would cut travel times and provide a big revenue source for Mexico as those treatment centers use Mexican suppliers, secretaries, nurses, and other laborers. Other Central American governments and Caribbean governments where salaries are lower could also try for this business using imported doctors to provide the breadth and depth of brain power and skills.

Share |      By Randall Parker at 2005 October 02 04:21 PM  Economics Health

Invisible Scientist said at October 2, 2005 5:47 PM:

This is just one sign of accelerating deflation in all manufactured goods and services. The competition against the United States is accelerating in all areas. This year, General Motors and Ford are losing even more market share to Japanese auto manufacturers, and this is not just because of the increasing price of gasoline, it is because of the stronger competition. In cutting-edge sciences and advanced technologies, the United States is still the leader, but in all areas competition and deflation is accelerating. It is possible that in the future, there will be currency controls, and trade barriers, and even restrictions to free travel. Reason: the annual trade deficit cannot continue this way...

Kurt said at October 2, 2005 8:06 PM:

I don't ever expect currency controls, much less restrictions on free travel from the U.S. government. I know of no politician who would ever suggest these things. The only way these things could be implemented is if we become some kind of dictatorship. If we become this kind of dictatorship, I will be the first to take up arms against it. I am sure many others will join me.

Medical tourism is big business because, not only is it cheaper, but you may be able to get leading edge therapies (stem cells, gene therapy) that may not be available here because of excessive regulation.

Kurt said at October 2, 2005 8:11 PM:

The "trade deficit" is a farce. We heard this same farce around 1990 with respect to the Japanese. Until the article came out on Forbes that showed it was a non issue. The "trade deficit" figures do not include direct foreign investment and other capital flows. As with the case with Japan in 1990, if you calculate the amount of American direct foreign investment going into China, its roughly equal to the "trade deficit" of Chinese imports into the U.S. Hense, the "trade deficit" is a non-issue.

matt said at October 2, 2005 9:41 PM:

I need some major dental work done. I have also considered going overseas to do it, because dental here (in Australia) is fantastically expensive. I had 3 wisdom teeth pulled in a procedure that took about 20 minutes for $1000! Thats $50 a minute. A Chinese friend told me the same proceedure in China would not cost more that $200.

Kurt said at October 2, 2005 10:37 PM:

I know people who have had cosmetic surgury done in Taiwan and Thailand. They have been very happy with the results. You do need to shop around and see if other people recommend the particular clinic and doctor you plan to see. Perhaps there are internet discussion boards with this kind of information available. Some of the expat websites might be good. Singapore is a bit expensive (compared to rest of Asia) but has excellent doctors and medical clinics.

Derek Copold said at October 3, 2005 8:17 AM:

Mexico already makes a lot of money on selling dental service to Americans. They also sell a lot of pharmaceuticals.

However, caution should be exercized there.

The big problem in the U.S. isn't necessarily insurance, though. It's the limitations on the number of doctors the AMA will license. They restrict the supply over here, giving them cartel power.

Ned said at October 3, 2005 1:29 PM:

Tha AMA does not license physicians. Physicians (and other health professionals) are licensed by the individual states. Criteria vary somewhat from state to state but are generally similar. Any physician who meets the standards will be licensed. The AMA does not set the licensing criteria and has nothing to do with the licensing process.

Medical school enrollments are set by the individual schools. Educating physicians is expensive, and enrollments are generally limited by the number of faculty, laboratory space, number of hospitals and teaching patients available, etc. The AMA does not tell medical schools how many students to enroll. The Federal trade Commission watches this sort of thing carefully.

Derek Copold said at October 3, 2005 3:05 PM:

Thanks for the correction, Ned.

Apparently, I swallowed a whopper.

daveg said at October 3, 2005 3:11 PM:

But the AMA works to set up qualfications that are overly burdensome and therefore reduce the overall supply of doctors.

This is the same as the legal work, were four years of undergrad plus three years of law school is overkill in many instances.

Randall Parker said at October 3, 2005 3:42 PM:

Aside: It is my understanding that the AMA approves new medical schools and tries to restrict number of schools and number of medical students. That's a hazy recollection. Ned, are you sure about that?

Also, hasn't there been a shift on Medicare and other government payment schedules that reduces the amount of billables that can be diverted to pay for training of medical students? Has the tuition for medical schools risen as a result?

In my view those who think that more doctors would drive down medical costs are making a fundamental error: You are assuming that doctors can not generate work in a system where third parties pay most costs and patients are too ignorant to judge what tests and procedures are medically necessary.

Areas such as Miami with a higher ratio of doctors to patients and higher medical costs per patient achieve no better average outcome than places like Minnesota with lower ratios of doctors to patients. This is a source of dissatisfaction with Minnesotan health care analysts who rightly feel they are subsidizing lots of excess Medicare treatments in Miami. I'm too busy to do a search on this. But studies have been done and I read a report several months ago that contrasted Minnesota and south Florida among other places. Higher doctor to patient ratios does not translate into better average medical outcomes.

Doctors can make work for themselves if they are not busy. They can order more tests. They can request more return visits. HMOs work against that. But HMOs have been demonized and most elderly people do not have to belong to an HMO. Also, HMOs face a legal environment that forces them to practice more medicine than actually helps any.

Ned said at October 3, 2005 6:55 PM:

Accreditation of medical schools in the US is controlled by the Liason Committee on Medical Education (LCME -http://www.lcme.org/). Its board is made up of equal numbers of members appointed by the AMA and the Association of American Medical Colleges, with one member from Canada. This group is recognized by the US Department of Education. There are now 125 accredited medical schools in the US, a big increase over 50 years ago. Most of these new medical schools have been sponsored by the individual states trying to increase the numbers of doctors they have. The number of medical students is also much higher, although flat for the last ten years or so. To simplify a complicated process, the LCME looks at medical schools to verify that they have the resources to teach adequately. This process has been intensely scrutinized by the Federal Trade Commission over the years, but no actions have been taken.

Yes, the Medicare reimbursement for the training of residents was substantially reduced some years ago. The AMA and the AAMC vigorously opposed this.

Physicians have a limited ability to generate their own work, although this effect is not as great as it may seem (lawyers do the same thing with billable hours). Remember, if you go to the barber, you get a haircut. What do you think you get when you go to the surgeon?

Bob Badour said at October 4, 2005 4:45 AM:


When I go to the barber, the money comes directly from my own pocket. Randall's point with respect to doctors is the money comes from someone else's pocket. If my barber says, "Come back tomorrow so I can make sure your hair is still neat", I would ignore him and keep my money. If my doctor says, "Come back next week so I can make sure you are not going to die", that's a different matter. I really, really don't want to die, and it's somebody else's money.

Ned said at October 4, 2005 5:27 AM:

I essentially agree. The fact that a lot of health care is paid for with OPM (other people's money) is a big factor in driving up costs. Note that this also occurs under government-paid medical plans (Canada and the UK), where all healt care is "free." Medical savings accounts would do much to reduce this, but they haven't gotten much play lately.

VIPIN BUCKSHEY said at October 19, 2005 1:53 AM:

Please contact us.

Samuel Paggi said at April 3, 2006 4:56 PM:

My wife and I just returned from Gyor, Hungary where I had extensive dental work including 6 implants, 28 crowns, 2 bridges and 1 root canal through Hungarian Dental Travel. I was able to save 75% over the quote from my local dentist. The dentist was amazing and his facilities were very sterile and clean. The country is beautiful with excellent wines and cuisine. The prices are incredibly low in all kinds of stores and services. I would highly recommend them to family and friends. Thanks very much, Sam

Medical Tourism said at July 21, 2007 2:33 AM:

Bob Badour has a point. I'd like to add that if a barber tells you that he's got a waiting list and he can't cut your hair for a month, no one, except maybe your girlfriend, is going to have a problem. But if your doctor tells you that, then we have a problem. Also, medical tourism is not just about the quality of the hospital or the qualifications of the surgeon. It involves physical as well as emotional preparation, and the readiness to face a lot of unexpected things, which are likely to pop up. You should read the personal experience of people like Maggi Grace, who has a written a book about it, called State of the Heart.

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