Medical Outsourcing

In examinations of globalization and outsourcing there has often been a case made that certain categories of jobs will be less likely to be outsourced to markets with lower costs.  Medical services have often been included on that list by commentators such as Thomas Friedman.  Two trends that I have been reading about make me question this notion.  Medical tourism and online prescriptions are two options that lead me to believe that outsourcing and globalization will eat at the edges of even the medical field.  We’ll all be better off for it in the end.

Medical tourism, like the name suggests, is traveling to a different location (usually a foreign country) for medical procedures usually in a lower cost environment.  Medical tourism has moved from sneaking off to Bogota for a nip and a tuck and now involves patients traveling to advanced facilities in “developing” countries for life-saving treatments.

Medical insurance companies often have very complex criteria for the coverage of certain procedures.  Elective procedures have a long-history of not being covered by medical insurance.  Some potentially lifesaving procedures have either been excluded from covereage or are covered only with very high deductibles.  Some of these procedures are available in advanced medical facilities in other countries for costs (including travel) that are well below the deductible charged by American insurance providers.  This lack of true medical coverage may lead some Americans to question the need for traditional insurance policies and look for alternative insurance products that reflect the possibility of travel for many medical treatments in non-emergency situations.  Certainly employers concerned about the runaway costs of healthcare are going to be desperate to find some sort of alternative.  Since employers are technically the consumers of health care we should look to companies large and small to take up this mantra for products that incorporate the realities of medical tourism to gain access to lower costs health care.

This trend injects a level of competition into the market for medical services that is long, long overdue in the United States and elsewhere in the developed world.  New facilities in places like India and Thailand have leapfrogged established health care institutions in terms of technology.  It’s not just lower labor costs but also more effective use of information technologies that make health care more affordable in these markets.

Another interesting trend is online prescriptions.  This is not ordering your herbal Viagra over the Internet.  Rather, this is a medical practitioner that receives inquiries from patients, often in off-hours.  Based on the (admittedly limited at the moment) ability to consult on the patient’s condition remotely a doctor can offer prescriptions and advice to patients.  Consultation will get better as we have ever-improving communications devices such as high-resolution web cameras and specialized medical diagnostic devices in our homes and more of our medical records will be in a digital format that is readily accessible yet secure. This is more immediate and flexible than a visit to one’s primary care physician, and also saves patients from the need to resort to an emergency room visit.  The emergency room has become the after-hours catch all for all medical needs immediate or otherwise.

In the near term there will be winners and losers in these shifts in the market.  Near term medical facilities that cater to the rich and upper middle class will likely lose business to medical tourism.  Insurance companies are going to need to change their offerings to meet the needs of these consumers or run the risk of losing customers to non-traditional medical insurance schemes that reflect the new market realities.  Whenever you remove a segment of the customer population from an insurance pool the harm of that migration is pushed down to those who rely most heavily on the insurance, so their costs to retain coverage are likely to increase in the short term.  Small medical practices will have an opportunity to reform their businesses to move some of the day-to-day work to online offerings and save the office time for more serious cases, extended consultation between doctor and patient and delivering an altogether higher caliber of service.  Reforms to health IT will push the costs of health care management down.  Patients in the destination countries for medical tourism will benefit from improvements to their own local health care infrastructure, the influx of cash paid by medical tourists, and the job opportunities that the industry will create.  In the United States our current model of medical licensing is going to need to change to reflect the new realities.

Many of the benefits of these transformations will come from having a mechanism that suits the patient/customer need– appropriate tools for the job.  Mis-use of emergency rooms for after-hours care and care of the uninsured is beyond disturbing.  Emergency rooms are being asked to handle a workload for which they were not originally intended, and their intended patient base pays the consequences for that.  If we’re really concerns about things like quality healthcare and being able to respond to disasters this is a situation we cannot accept.  Note to Republican politicians: the ability to go to an emergency room does not constitute “access to healthcare” for the uninsured.