Medical Tourism as a Viable Investment Theme?

Barron's had a fascinating article this weekend about something called medical tourism. The basic idea as put forth in the article is that US insurance companies are slowly starting to encourage policy holders to go abroad for medical procedures. The costs are shockingly cheaper than the US. Barron's said that the costs, including flying there with a companion, having a short stay and getting the procedure, could be half or even less than half the cost of the same procedure in the US.

The concept is a new one on me and I find it fascinating. The typical context along these lines in past blog posts has been, if you move to a foreign country what would you do for medical care? While I have no plans to move anywhere, there is something intellectually intriguing about living in New Zealand or Uruguay or the like. So the idea of medical service in another country is fascinating (repeated from above for emphasis).

The countries mentioned in the article were India, Thailand, Singapore and Panama, but really far more attention was given to India and Thailand. Without repeating the entire table of examples, a heart bypass procedure that Barron's estimates at $70,000-$133,000 in the US would cost $7,000 in India, $22,000 in Thailand, $16,300 in Singapore and $10,500 in Panama.

The article did not really address quality of care in great detail and I do not know about this (anyone who does please comment on it) but in terms of financial consequence this is truly game changing. The motivation of the insurance companies for this is obvious, but if this sort of thing could generally put some sort of downward pressure on medical costs or slow down the rate of price inflation, then it could be a positive for the insured as well.

It also raises a question about what type of health insurance coverage to have. If you need a hip replacement, your insurance covers it and somehow the insurance company convinces you to go somewhere else, then fine; but if your insurance wouldn't cover a hip replacement for whatever reason or you do not have insurance at all, then going to Singapore and paying $12,000 for the procedure, $2000 for airfare (the low end of the range for two people leaving from Phoenix) and maybe another $5000 for who knows what else adds up to less than $20,000 and becomes very doable even if you have to borrow every single nickel for the trip.

Flying to Panama looks to be close to $700 per person. Barron's says a new hip would be $5500 there so the whole thing might not even be $10,000.

Obviously no one would prefer to go into debt for $19,000, or $10,000, but these are not ruinous amounts for anyone who needs to.

If the care is comparable, then living in New Zealand becomes a little easier (15 hour travel time to Singapore) assuming you can find and do not have to wait to see a primary care physician. Ditto Uruguay to Panama (coincidentally, also about 15 hours travel time).

This is an investable theme. Barron's mentioned five stocks, four of which I was able to find US five letter designators for, but it you have any interest you need to verify that the symbols are accurate. From Thailand: Bumrungrad Hospital (I found two symbols, I don't know which is correct: BUGGF and BUHPF), Dusit Medical Services (again, I found two symbols and don't know which one is correct: BDULF and BDUUF). From Singapore: Parkway Holdings (PKWHF and PKWXY, I don't know if the ADR symbol is active) and Raffles Medical (RAFLF).

This was the first I've heard of this theme and it is interesting on some level. If this a viable investment theme then it becomes a way to access certain countries via the healthcare sector and there might even be more stocks and countries than the ones listed. Parkway Holdings has a 0.42% weight in the SPDR International Healthcare ETF (IRY) with none of the other stocks included. The WisdomTree International Health (DBR) doesn't own any of them and neither does the iShares Global Healthcare ETF (IXJ).

If the quality of the healthcare does not stand up, then there is diminished utility from a personal finance standpoint but the article implied the motivation in these places for this to work is very strong. More learning is required, but for now, how about exercising more and drinking less soda?

Comments

[Joseph L. S...:]

I doubt anyone has yet compiled an extensive database with exit interviews followed up, say, a year and three years later, with a large enough population of "medical tourists" to know if the quality of care is comparable.

We do have anecdotal evidence and it is, thus far, quite good. Many of the physicians are US Board Certified, practice in the US for a few years, then miss their home countries and return to practice there. Their English is excellent, their skills as high as any US doctor -- certified by US medical boards.

I have one anecdotal example from this year and numerous others from among my friends and clients in the past few. A friend who is a dance instructor without medical insurance was told she could not continue dancing without a hip replacement. Total cost in the US -- somewhere around $80,000. Total cost in Malaysia including a recuperative stay in a 5-star hotel, airfare, nursing and surgery? $14,000. Today, 9 months later, she is dancing again...

Sep 08 12:24 PM

[Tropean:]

Medical tourism for cosmetic procedures is well established. In 2007 I was in Argentina and was very impressed with marketing, aimed at Americans and Europeans, for facelifts, breast augmentations, and the like. Given my assumption that this would be a discerning demographic, not only quick to tell their peers about less-than-satisfactory results but also able to take their business anywhere they wish, my guess is that the quality of the care provided is at least adequate. Perhaps that adds some color to the Barrons piece.

Sep 08 12:44 PM

[Josef Woodman:]

Roger: Excellent piece. You mentioned you wanted to more information on quality of care: There are now more than 250 JCI-approved international hospitals, accredited by the same US agency that accredits most hospitals here in the US. Moreover, these to international facilities are often partnered with US healthcare institutions, e.g. Harvard Medical, Jo
hns Hopkins, Cleveland Clinic, et al. So, the short answer is, yes, the international quality of care "stands up," and often surpasses the care and patient service found on our shores.

Sep 08 02:21 PM

[Alan Young:]

These ADRs are not much good. PKWXY is completely dormant; I couldn't pull up any trading record at all. PKWHF trades about twice a month. I didn't bother checking the others, but the way to do so is at www.pinksheets.com.

Investibility aside, does anyone think it odd that it's NOT a national scandal that we Americans cannot get afforadable health care in this country, even after spending 16% of our GDP on it, and have to go abroad? How come this is not a prominent part of the current debate about reform?

Sep 08 02:29 PM

[Roger Nusbaum:]

thank you for the data.

in terms of simple logistics (the actual planning of a surgery and a trip) some questions are coming up on my blog about being able to get over there (wherever there may be) on a timely basis. it would seem being able to travel when needed heart surgery could be difficult to pull off.


On Sep 08 02:21 PM Josef Woodman wrote:

> Roger: Excellent piece. You mentioned you wanted to more information
> on quality of care: There are now more than 250 JCI-approved international
> hospitals, accredited by the same US agency that accredits most
> hospitals here in the US. Moreover, these to international facilities
> are often partnered with US healthcare institutions, e.g. Harvard
> Medical, Jo
hns Hopkins, Cleveland Clinic, et al. So, the short
> answer is, yes, the international quality of care "stands up," and
> often surpasses the care and patient service found on our shores.

Sep 08 03:42 PM

[YoYoMama:]

I can provide a first-hand experience. I have traveled to Costa Rica for treatment. My doctor was US board certified, and his clinic, while not fancy by US standards, was spotlessly clean. I received un-rushed, personalized attention, and was kept in his clinic for as long as I needed to recover from my procedure.

Most importantly, I was told UPFRONT what my costs would be. I paid not a penny more. In fact, my doctor ended up refunding $1,200 on my bill because he found the surgery not to be as extensive as he thought!!

Compare this to American hospitals, that are chronically understaffed, overworked, and you are shuffled in and out regardless of whether or not you are physically ready to leave. Why is that? Because INSURANCE dictates your care, not the doctor.

And the kicker? You have NO IDEA how much it will cost you on the back end of your stay. Keeping you in the dark is the best way to run up the highest possible bill on the back end. How else can a hospital get away with charging $7.00 for a pitcher of water (yes, that was on my hospital bill for the birth of my child).

My surgery in Costa Rica was 1/3 of what it would have cost in the United States, and I do not have one complaint about the care I received. In terms of personalized care, I found the treatment in Costa Rica absolutely superior to anything I have ever experienced in an American hospital.

Should I require serious medical treatment again, my FIRST choice will be to go OUTSIDE the United States. God willing, I'll never have a serious procedure within our borders ever again.

Sep 09 09:36 AM

[Roger Nusbaum:]

how did you figure out to go to Costa Rica? then how did you come to choose the doctor and the facility?


On Sep 09 09:36 AM YoYoMama wrote:

> I can provide a first-hand experience. I have traveled to Costa
> Rica for treatment. My doctor was US board certified, and his clinic,
> while not fancy by US standards, was spotlessly clean. I received
> un-rushed, personalized attention, and was kept in his clinic for
> as long as I needed to recover from my procedure.
>
> Most importantly, I was told UPFRONT what my costs would be. I paid
> not a penny more. In fact, my doctor ended up refunding $1,200 on
> my bill because he found the surgery not to be as extensive as he
> thought!!
>
> Compare this to American hospitals, that are chronically understaffed,
> overworked, and you are shuffled in and out regardless of whether
> or not you are physically ready to leave. Why is that? Because
> INSURANCE dictates your care, not the doctor.
>
> And the kicker? You have NO IDEA how much it will cost you on the
> back end of your stay. Keeping you in the dark is the best way to
> run up the highest possible bill on the back end. How else can a
> hospital get away with charging $7.00 for a pitcher of water (yes,
> that was on my hospital bill for the birth of my child).
>
> My surgery in Costa Rica was 1/3 of what it would have cost in the
> United States, and I do not have one complaint about the care I received.
> In terms of personalized care, I found the treatment in Costa Rica
> absolutely superior to anything I have ever experienced in an American
> hospital.
>
> Should I require serious medical treatment again, my FIRST choice
> will be to go OUTSIDE the United States. God willing, I'll never
> have a serious procedure within our borders ever again.

Sep 09 10:43 AM

[Chancer:]

If we get national healthcare with rationing, medical tourism will explode for those who can afford it. If private insurance continues, it will still grow as a way for insurance companies to save on cost. It is called competition. If it becomes sizeable, hospitals and doctors in the USA might reduce their fees to compete.

Panama is close enough when you cannot wait nor travel easily.

Sep 09 01:56 PM

[TinyTim:]

Specialized medical procedures--- meet globalization

Sep 09 04:09 PM

[Mr. Ed, Jr.:]

Chancer,

Excellent points. Nobody should be surprised (And yet, they will be...) when private insurance companies outsource the health care in order to compete with the government's public option or to offset bloated and costly government regulations.

If the same work can be done in another country for much less, it will be. Have we learned nothing from watching so many US manufacturers move their production facilities to Mexico and China ? Are you still surprised when you call a US company's customer service number and speak to someone in India ? (I am surprised when I am NOT speaking to someone in India. )

When the government is a not-for-profit competitor and also sets the rules for everyone, insurance companies will have to cut their costs. But not necessarily their prices.

Is it realistic to think that the government plan is about you getting lower prices ? This article

online.wsj.com/article...

is one of many reasons to doubt that a government option is about you. It seems to be more about politicians getting more power-- and more say in running your life. But then, who among us wouldn't want control of 1/6 of the US economy, even in its present sad state?

The handwriting is all over the wall. You may one day be flying to India for your open heart surgery. Be sure to visit the Taj Mahal.



On Sep 09 01:56 PM Chancer wrote:

> If we get national healthcare with rationing, medical tourism will
> explode for those who can afford it. If private insurance continues,
> it will still grow as a way for insurance companies to save on cost.
> It is called competition. If it becomes sizeable, hospitals and doctors
> in the USA might reduce their fees to compete.
>
> Panama is close enough when you cannot wait nor travel easily.

Sep 10 02:38 AM

[masjim:]

I've had experience in both Singapore and Thailand. My wife and I had comprehensive checkups in Singapore last year. In my opinion, the medical personnel and facilities were as good as what's available in the USA. The service was much better. The cost was about $3500 both of us. I was very satisfied.

My experience in Thailand occurred some 15 years ago; so maybe things have changed. I had arthroscopic surgery on my knee. The surgeon had been the team surgeon for the LA Rams. I was walking around the next day. The cost was less than $500.

My wife had a hysterectomy in Thailand. The procedure may not have been necessary, and my wife contracted a fungus infection. My boss had heart bypass surgery in Thailand around the same time. His surgeon was on leave from the Mayo Clinic and was, undoubtedly an excellent surgeon. However, my boss also contracted a fungus infection. The three of us were treated at the same hospital. The hospital was considered the best in Thailand; but apparently the environment in the operating rooms were not sterile. Hopefully this has improved in the last 15 years.

Sep 10 06:24 AM

[YoYoMama:]

Roger - I sent you a personal mail on this subject.

There are several online forums for medical tourism, and most doctors who are fostering medical tourism practices have their own websites.


On Sep 09 10:43 AM Roger Nusbaum wrote:

> how did you figure out to go to Costa Rica? then how did you come
> to choose the doctor and the facility?

Sep 10 08:58 AM

[Arlen Meye...:]

Thanks for your comments and piece on medical tourism. As the cofounder and Chief Medical Officer of a medical tourism facilitator, medvoy.com let me offer a few caveats about medical tourism:
1. There are several definitions of medical tourism. This article describes leaving home to get care and can be inbound, outbound or domestic.
2. There are several issues that have not been resolved including liability, postoperative care, insurance coverage, international records transfer, security and confidentiality, quality assurance, and credentialing.
3. The medical tourism industry is overhyped and is appropriate for a relatively small slice of the US population. It is not a solution for the US healthcare system.
4. Medical tourism has forced us to reexamine the doctor-patient relationship and what it involves. With patients using facilitators to find consultants rather than their primary doctors, the dynamics have changed.
5. People seek care away from home for 5 basic reasons: cost, availability (e.g stem cell treatments not available in the US), access (to work around long waiting lists), travel and confidentiality (don't want people to know they had something done)

Medical tourism is an evolving industry getting boosted by the US healthcare reform debate. Be careful out there.

Sep 29 01:36 PM