Note: I wrote this piece as a column for the Idaho Statesman's Business Insider's themed edition on travel and tourism, which appeared last week:
Medical tourism refers to the willingness of some people to travel to another location to receive medical care. Early medical tourism involved international trips by those who could afford to pay for all the associated travel costs yet still save money on the cost of procedures ranging from cosmetic surgery to open heart surgery.
In March of 2010, Lowe’s contracted with the Cleveland Clinic to offer cardiac surgery services for its employees and their beneficiaries under a bundled payment arrangement.
A bundled payment is a single payment that covers multiple services for a single episode of care. For example, a bundled payment might include the fees for the hospital, the surgeon, the anesthesiologist, and the radiologist during the hospitalization for the heart surgery.
The Cleveland Clinic in essence takes the risk as to whether the payment will cover all of the costs associated with the treatment of a particular patient. The calculation is that even though some patients may be more costly, others can be managed under the fixed price at a profit. The employer benefits by knowing what the cost will be and that its costs will be limited.
In picking the Cleveland Clinic, Lowe’s knew that it would get predictable quality at a predictable cost. By avoiding care with variable outcomes, often at much higher prices, Lowe’s could afford to waive employees’ usual $500 deductible, cover the airfare, hotel, and living expenses for the patient and a family member while under clinic care in Ohio, and still come out ahead, even when factoring in complications, readmissions, and consequent disability, all very expensive propositions for an employer. And employees seem willing to travel for medical care when it means they will save on their deductible and are not responsible for the travel costs.
At St. Luke’s, we are well positioned to develop a similar program for employers with employees in the western part of the United States. St. Luke’s Boise and Meridian Medical Centers are already ranked one of the top 100 hospitals in the country for cardiac surgery, and have been ranked in the top 10 percent of all hospitals for three years in a row.
We are also ranked in the top 5 percent of hospitals in the country for joint replacement, another costly procedure. And our St. Luke’s Wood River hospital has a five-star ranking, top performance for spine surgery.
We know that Medicare spends less per beneficiary in Boise, Idaho (average $7,104) than in Cleveland, Ohio (average $9,610), based on the latest available data from the Dartmouth Atlas, so that gives us the advantage of starting from a lower cost position.
We can envision St. Luke’s boosting the Idaho economy by attracting medical tourists for the treatment of certain high-cost procedures that we can perform at a lower cost, with excellent outcomes and unparalleled caring from our staff, in one of the most beautiful parts of the country. I have been to Cleveland, and I can tell you I would much rather recuperate in the beautiful surroundings of Boise or Wood River!
David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.