1) John, in November, 2007 the Center published a paper on Medical Tourism, Medical Tourism: Global Competition in Healthcare. Do you have a sense of how the U.S. market for medical travel and medical tourism has developed over that two-year period?

John Goodman:  yes I think we are in the very very early stages of what could amount to an explosion in traffic across border to get medical care. Every major health insurer in the U.S. is looking at ways to take advantage of lower cost, high quality care across the border.  Most of the attention has been given to hospitals in Thailand, Singapore and India. These hospitals are quite good and they are competing internationally and I expect the Americans will choose these (or other) markets more relative to the prices and quality of care available.

2) Parallels are being drawn between how globalization forever changed the automotive and electronics industries and the price and quality issues now facing U.S. healthcare providers. Do you think this is a fair and accurate observation?

John Goodman: Well I think these are very different markets and healthcare is a services market and it is not easy to take those services across the border. Now, we have the internet with which we can do a lot, we can take advantage of the places around the world, but there is a limit to that. Clearly reading diagnostic scans is something that can be done anywhere in the world and certain kinds of diagnosis can be done in any parts of the world but you can’t do surgery long distance. So I really think that what is causing huge interest in medical tourism is high cost and inefficiency of care in United States.

3) There seems to be growing indications that U.S. providers are increasingly concerned about losing revenue from patients seeking lower cost alternatives, both domestically and internationally. Do you believe that U.S. hospitals, that historically have not needed or been willing to compete on price, can, in fact compete effectively?

John Goodman: Well I think many of them are already competing it is just that they are not competing for American patients. There are about 50 hospitals in United States that are actively recruiting patients from South and Central America and many of them have representatives in these countries and are forming relationships with doctors and trying to generate businesses and most of these hospitals charge if not a package price, something close to it, so they are right now competing. In addition there are a number of facilities competing for patients from Canada, and as a matter of fact there are several businesses that have sprung up that connect Canadian patients with American facilities. And almost always the Canadian patient gets a price package and usually it is a very low price well below what the Americans are paying.

4) The  2009 market forecasts, from the Deloitte Center for Health Solutions, for instance, are noticeably lower than 2008 forecasts for Americans willing to travel internationally for care; 40% in 2008 vs. 10% in 2009. What are your thoughts on market issues that might have caused these projections to change so dramatically? Do you think economic realities and concerns among consumers is having a significant impact?

John Goodman: No, I just think that we don’t have very good statistics on this market and the forecasts are just reflecting that. I think the traffic is increasing and not decreasing and again it is two way traffic. We have people coming to the United States from Latin America and Canada and paying package prices for care that Americans don’t get to pay. And we have Americans leaving the country to go to Latin America and other places because of high cost in this country.

5) One of the developments in medical travel is the substantial willingness of patients to travel out of their local area, but inside the Country, for lower cost quality care. This Domestic Medical Travel market appears to be picking up steam as a number of U.S. providers are opening their arms to this business. Is this an example of the market working as it should?

John Goodman: Well, it is an example of price competition because the reason people will travel to other city for care is because there is a lower cost. Most patients in US healthcare system will never see a real price for anything. So the providers are not competing for those patients on the basis of price. When they don’t compete on price they don’t compete on quality either. So the question is to what extents are we going to encourage the price competition. In order to really make this work I think the patient has to be paying the marginal cost of care and so if the patient gains financially from travelling a lot more patients are going to travel.

6) Of course, the elephant in the room looks a lot like the health plans. With larger employers representing a big portion of the market for medical travel patients, what are the incentives for insurers to fully embrace and integrate international providers into their networks?

John Goodman: What insurers need to do is allow the person they are insuring to share in the gains from travel. If I travel to another city for heart surgery and there is a $10,000 savings the insurance company have to give me at least a half of it and if they do then I will be more willing to travel. So the insurance company and the employer is going to make money if people travel to lower cost destinations. But there are going to have to share those gains with the employee or the insured if they expect people to be willing to do it. 

7) Finally, John, what do you see in the health policy reform agenda that will impact the development of the U.S. market for medical travel?

John Goodman: Health reform, the topic that we are currently talking about is going to lead to higher cost and there is nothing in any other reform bills before congress that can realistically be expected to reduce healthcare spending. So if healthcare spending in United States continues to grow at twice the rate of growth of our income people are going to have to look outside the country in order to get low cost and high quality medical care. So bad reforms will accelerate interest in crossing the border for healthcare.

Bio:

John C. Goodman founded the NCPA in 1983 and has served as President and CEO since the center's inception. The Wall Street Journal called Dr. Goodman "the father of Health Savings Accounts," and is known for his ideas on ways to transfer power from government to the people.

He is the author of nine books, numerous editorials and is a frequently sought after expert for television relative to topics including flat tax, welfare reform and Social Security privatization.

He regularly briefs members of Congress on economic policy issues and frequently testifies before congressional committees. He is author/co-author of more than 50 published studies on such topics as health policy, tax reform and school choice.