Employers Opt for Medical Tourism

In Priceless, I hazarded a guess that employers could cut the cost of hospital care in half by engaging in medical tourism. It’s a variation on what is sometimes called “value-based purchasing” or “reference pricing.” In its pure form, the employer picks a low-cost, high quality facility and covers all costs there. If the employee chooses another hospital, the employee must pay the full extra cost of the more expensive choice. In Priceless, I argued that to take full advantage of the opportunities available, the patients must be willing to travel.

Several large companies are already trying the idea out. As Jim Landers explains:

Wal-Mart Stores Inc., the nation’s largest employer, will jump into medical tourism next year by offering insured employees no-cost heart and spine surgeries at Scott & White Memorial [in Temple, Texas] and seven other hospitals across the country…By using a hospital in the new narrow network, patients could save as much as $5,000 or more…

The hospitals in Wal-Mart’s network — including the Cleveland Clinic and Geisinger Medical Center in Danville, Pa. — have gained national reputations for both quality and value. Physicians and surgeons work under financial incentives rewarding improved patient outcomes.

Come fly with me

Here is the complete network:

  1. Temple’s Scott & White Memorial — Texas (cardiac surgeries, spine surgeries)
  2. Mayo Clinic’s three hospitals (organ transplants)
  3. Cleveland Clinic (cardiac surgeries)
  4. Geisinger Medical Center (PA) (cardiac surgeries)
  5. Mercy Hospital Springfield — Springfield, Mo. (spine surgeries)
  6. Virginia Mason Medical Center — Seattle (cardiac surgeries, spine surgeries)

This is actually an expansion of a program already under way. And Wal-Mart is not alone:

  • Wal-Mart developed a relationship with Mayo Clinic in 2007 for transplant and lung volume reduction surgeries.
  • Lowes began an initiative in 2010 when it began offering workers the option to travel to Cleveland Clinic for cardiac procedures.
  • PepsiCo announced in December of 2011 that it planned to offer its employees the option to travel to Johns Hopkins Medicine in Baltimore for cardiac and complex joint replacement surgeries.

Writing at Tom Emerick’s blog, Brian Klepper sums up the trend this way:

Health care organizations should not underestimate the significance of Wal-Mart’s (Center of Excellence) program. It is one of many signs suggesting that, after 40 years of being impervious to market forces, the health care bubble could burst. All it would take to change health care as we have come to know it is for more employers to collaborate and follow Wal-Mart’s, Lowes’ and PepsiCo’s leads. They would stop doing business with health care organizations that are unaccountable and don’t provide measurable value, and transfer that business to those that do.

Comments (14)

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  1. Jimmy says:

    I think that Wal-Mart, Lowes and PepsiCo are on to something that can really change the way employers offer healthcare.

  2. Nichole says:

    Wow Walmart is on top of healthcare for employees.

  3. Jordan says:

    Excellent post. Perhaps it should go even farther.. International medical tourism has remarkable savings for certain procedures (dental work for example). The marginal benefits extend to multiple industries as well though.

  4. Dorothy Calabrese MD says:

    I am a poster child for medical tourism. My regional consultative practice has depended on “medical tourism” for over 30 years, My children and I have traveled far and wide for specialized care in the US.

    However, an innocent patient – and all patients are innocent – can die or suffer terribly under this scenario – because there is no way patients can know what insiders in my profession know.

    Just one example of many. Cadaveric lungs for transplant are distributed locally, unlike solid organs which can survive transport to very distant recipients. This means that you’re “competing” with many more patients for matching lungs at the hypothetical Ubercorporate Texas “center of excellence.” This has multiple perverse effects:

    You will never get picked if you have cystic fibrosis and you’re “competing” with smokers at some lung transplant centers. Many centers have openly admitted they’ll always prefer to pick the smoker because there are no other organs adversely impacted in smokers compared to cystic fibrosis patients.
    The operation can be much shorter and easier in a smoker compared to a CF patient, where the lungs will eventually stick to the inside of the thoracic cavity.

    These centers that selectively pick certain diagnostic groups over others tout that their outcome statistics are much better. My alma mater Columbia NY Presbyterian Medical Center has horrible statistics relative to what they would have if they did not reach out to the patients no one else will transplant etc.

    When you spend a long time on a cadaveric lung transplant list you must live near the transplant center – pre and post op. To relocate to the Ubercorporate “center of excellence” and lose the local care and support of your family and other doctors when you are dying from cystic fibrosis is not worth it, when there is this artificial scarcity of potential donors created by this Ubercorporate bottom line scenario. It is a lonely place being in a remote motel waiting for an organ that will realistically never come and dying far from home.

    It is never the common case that gets hurt in these clever Ubercoporporate well intentioned health savings offerings. It is the most vulnerable – the innocent patients, we as physicians, have taken an oath to protect.

    Children and adults with cystic fibrosis who do not have the $5000 and must go to the Ubercorporate “center of excellence” may not save money when they sign on to the potentially wrong waiting list. . .the list to nowhere. Most will never know because “informed consent” does not protect them.

    Dorothy Calabrese MD
    Allergy & Immunology, San Clemente, CA

  5. Ken says:

    This is fascinating.

  6. Ken Robertson says:

    John Stuart Mill, ON LIBERTY, “Government operations tend to be everywhere alike. With individuals and voluntary associations, on the contrary, there are varied experiments, and endless diversity of experience. What the State can usefully do, is to make itself a central depository,and active circulator and diffuser, of the experience resulting from many trials. Its business is to enable each experimentalist to benefit by the experiments of others, instead of tolerating no experiments but its own.”

  7. Robert says:

    Unless Temple, Texas has some kind of pull for talent or a high tech facility I’m unaware of, my first thought is “I wouldn’t want my spine/heart surgery from Temple, Texas…”

  8. Charlotte Spencer says:

    Spinal, heart and cardiac surgeries along with organ transplants? for free? Wow! I’m not gonna lie…this kinda makes me want to work for Walmart..

  9. Alex says:

    This is a major move and is likely to shake up the whole industry.

  10. Al says:

    I like medical tourism, but I have a question for WalMart. Will their patients be more likely used in physician training than the rest?

  11. seyyed says:

    an innovate way to reduce health care costs-sounds good! as far as international medical tourism, i think the costs of traveling to another country outweigh the cost of paying for procedures to be done in the country

  12. Dr Bob Kramer says:


    This is not medical tourism, this is Walmart’s attempt to decrease costs by sending their employees to true centers of excellence; Cleveland Clinic, Geisinger, Scott and White, Mayo, and others who have demonstrated higher quality with resulting lower cost. True medical tourism was started for people to go overseas where facilities were good and medical costs were far lower than in the US. It was an attempt to lower cost, not primarily to improve quality. That is the big difference. The folks sending patients to India, Thailand, Singapore will tell you it is about quality, but it is really sold by telling people that a kidney transplant in the states is $40-50,000, whereas in Bankock it costs only $5000. Cost, not quality is the driver.

    Dr Bob Kramer

  13. Dorothy Calabrese MD says:

    Dr John Goodman has the credentials, gravitas and insight to appropriately advance the evolving definition of “medical tourism” It is in the best interests of physicians and patients to encourage the evolution of healthcare language in ways that positively promote our economy. US healthcare is better served in models that reflect abundance – not scarcity. Dr Goodman hails from a state that promotes “medical tourism” to MD Anderson and other top Texas medical centers.

    I recall having to take one of my sons to University of North Carolina Medical Center UNC for a procedure that was not done anywhere else at that time. I was instructed to do this by our UCSD Medical Center docs. His brother, his best buddy, stayed with him in the hospital room 24/7. I was told to schedule this elective but lifesaving procedure when there was no football game. Thus the hospital arranged for me to stay for a reduced rate on the UNC campus at an beautiful plantation type hotel with a AAAAA restaurant. In all the previous 16 years that we “battled” my son’s illness, this was the first time that I as a single parent ever experienced a real “vacation.” I unplugged and was so grateful. Having come from the Bronx, I was suddenly immersed in a South I had only read about.

    Every year, political satirist, Stephen Colbert contributes new words [truthiness] and expanded definitions [super pac] to our lexicon.

    For decades I have positively reframed, for my new long distance patients, this evolving use of the term “medical tourism” and it transforms their healing experience. The value of medical care improves when traveling for care is a positive and should be presented as a positive. . . because sometimes having to uproot and travel for care is definitely not a positive, as I noted above. “Medical tourism” evokes the positives – patient choice. . . physician innovation. . .discovery. . . hope.

    Similarly, I’d respectfully reframe “centers of excellence” as those centers selected by patients and physicians [as UCSD referred us to UNC] . . . not as defined by Ubercorporation, a health insurance corporation, US News and World Report etc. where there are potential conflicting agendas with the physician-patient relationship. Real centers of excellence evolve because of real physician competition and real patient choice – such as the NYC race to the top of competing medical school academic centers: Columbia, Cornell, NYU, Einstein, SUNY, Mt Sinai… Would I have my heart transplant at Cornell because Ubercorporation financially incentivizes me to go to Cornell? Or will I go “home” to Columbia P & S and the NY Presbyterian Medical Center, the hospital of my childhood, medical school and training and beyond?

    I spoke to physicians about this expanded and more meaningful use of the term “medical tourism” at an Orange County Medical Association meeting in Sept. 2012. The response was universally favorable – particularly at a time when physicians want and need to re-envision our role in healthcare.

    Dr. Goodman – please continue to push the envelope in expanding on abundance – in this case where a flight into JFK is as much a “medical tourism” as a flight to Mumbai General.

    Dorothy Calabrese MD
    Allergy & Immunology San Clemente, CA

  14. Dr Prem says:

    Dr Prem Jagyasi, renowned Medical Tourism Consultant offers high-profile global healthcare consultancy services promoting government authorities, healthcare organizations and medical tourism facilitators. The health tourism consultancy services are provided in conjunction with international and regional representatives. Personalized, tailored and comprehensive consultancy services are available based on individual requirements. Please contact Dr Prem Jagyasi for more details.