1. MEDICAL TOURISM: IMPLICATIONS FOR PROVIDERS AND PLANS
Mark S. Kopson
Introduction
What is Medical Tourism? How one defines “medical tourism” is frequently
determined by the impact of the phenomenon upon the individual crafting the definition.
It can range from “risking one’s life to obtain likely substandard care in dangerous
locales” to “travel[ing] to another country to receive medical, dental and surgical care
while at the same time receiving equal to or greater care than they would have in their
own country…because of affordability, better access to care or a higher level of quality
of care.”1
For purposes of this program, we define medical tourism as “the practice of
traveling from one country to another for the purpose of obtaining medical care or
treatment.” By doing so, we are intentionally disregarding medical travel between two
locations both within the United States (“US”). Intra-US medical travel is a well-
established phenomenon, most commonly driven by a provider’s reputation or plan-
designation as a “center of excellence” for the diagnosis, care and treatment of specific
diseases (e.g., cancer) or for specific procedures (e.g., bariatric surgery).
Using our definition, medical tourism can be broken down into three categories:
(i) travel away from the US (“outbound”), (ii) travel to the US (“inbound “), and (iii)
travel between two non-US countries (“non-US”). This paper focuses on outbound
medical tourism’s implications for US-based providers and plans. The implications of in-
bound and non-US medical tourism, particularly for academic medical centers, are
addressed in the paper of my co-presenter, David W. Rowan, Esq.
1. The Prevalence and Growth of Medical Tourism
Exact figures regarding the prevalence of outbound medical tourism are difficult
to come by, and variations between estimates are often influenced by the definitions used
in their calculation. In its 2008 study on medical tourism,2 one of the most widely cited,
the Deloitte Center for Health Solutions estimated 750,000 outbound US medical tourists
in 2007. By comparison, in its own 2008 study3, the global consulting firm of McKinsey
1
“What is Medical Tourism?,” Medical Tourism Association homepage (available at:
http://www.medicaltourismassociation.com).
2
“Medical Tourism: Consumers in Search of Value,” Deloitte Center for Health Solutions (April 14, 2009)
(available at http://www.deloitte.com/dtt/cda/doc/content/us_chs_MedicalTourismStudy%283%29.pdf)
(hereinafter, “Deloitte Tourism”).
3
Ehrbeck, T., Guevara, C., & Mango, P.D.. (2008, May). Mapping the market for medical travel. The
McKinsey Quarterly (available at http://www.mckinseyquarterly.com/Mapping_the_market_for
_travel_2134) (hereinafter, “McKinsey”).
1

2. & Company, estimated only 60,000 to 85,000 total individual medical tourists per year,4
with only 5,000 to 10,000 of those being outbound from the US.5 McKinsey
acknowledged the vast difference between it numbers and those in other studies and cited
as reasons its definition of medical travelers as “people whose primary and explicit
purpose in traveling is medical treatment in a foreign country.”6 In addition to standard
tourists requiring emergency care and expatriates, the McKinsey study also excluded
travelers seeking outpatient care and patients traveling to contiguous countries.7
While there are wide variations in estimates of current outbound medical tourism,
virtually all published studies have found potential for expansion and some have
projected potentially explosive growth in the near-term future. McKinsey, for example,
concluded that while there currently is “much potential for growth,” outbound medical
tourism would probably grow to 500,000 to 700,000 patients per year if US plans covered
medical travel.8 Deloitte expressed even greater confidence, estimating that US outbound
medical tourism will experience annual growth rates of 100% between 2007 and 2010,
when it will reach six million patients per year.9 On a more conservative note, a vice
president of The Doctors Company, the self-proclaimed “largest national insurer of
physician and surgeon liability,” concluded that “[f]oreign countries have an incentive to
welcome U.S. and Canadian patients,” and that “U.S. hospitals and doctors will see more
competition as globalization takes place.”10
2. Factors Driving the Growth of Medical Tourism
There is some disagreement as to exactly which factors are principally driving the
growth in outbound medical tourism. The following are among the most commonly cited
factors:
• rapidly rising healthcare costs in the US
• the significant reduction in the percentage of US residents with healthcare
insurance and with first-dollar coverage
• the growth of healthcare consumerism
• the willingness of self-insured employers to explore all manner of cost-
saving options
• the substantially lower cost of healthcare outside of the US
• increased marketing by foreign providers via the internet
• increased confidence in the quality of care furnished by foreign providers,
both professional and facility
• the development of medical tourism facilitators, and
• the enhanced ease and reduced cost of international travel.
4
McKinsey, at 2.
5
McKinsey, at 6.
6
McKinsey, at 2.
7
Id.
8
McKinsey, at 6.
9
Deloitte Tourism, at 3.
10
Siadek, L (2008, Q1). Competition from Medical Tourism. The Doctor’s Advocate (available at
http://www.thedoctors.com/KnowledgeCenter/Publications/TheDoctorsAdvocate/CON_ID_001490).
2

3. The first four factors are inextricably intertwined and, when combined with the
substantially lower cost of healthcare outside of the US, virtually ensured that the
remaining factors would fall into place.
A. Economic Changes Within the US
One need not be a health lawyer to know that per-capita US healthcare costs are
among the highest in the world and continue to rise. Nonetheless the impact of the
remaining cost-related factors identified above, may be surprising. In its 2008 Survey of
Health Care Consumers,11 the Deloitte Center for Health Solutions found a full 12% of
those surveyed in September 2007 had no health insurance of any kind.12 The Deloitte
results are consistent with those of a recently published study commissioned by the
Robert Wood Johnson Foundation.13 That study found that in 2007, 45.7 million
Americans, 22 percent of men and 18 percent of women (including more than 18 percent
of working adults), had no health insurance, and that only 67 percent of US residents
under age 65 had with private insurance (compared to 73 percent in 1994).14
It is clear that these decreases in insurance coverage are changing both attitudes
and behavior. Five percent of the uninsured surveyed by Deloitte in September 2007
reported participation in outbound medical tourism, compared to only 3% of those with
health insurance.15 Perhaps more telling, only 7% of surveyed consumers said they were
“financially prepared for their future health care needs,” and 93% felt “insecure about
their ability to pay for” them.16 It is not surprising therefore, that almost 40% of all those
surveyed said they “would consider having an elective procedure performed in a foreign
country if they could save 50% or more and be assured that the quality was equal to or
better than what they can have in the U.S..”17 In its follow-up survey one year later,18
Deloitte’s noted continuing impacts of rising costs and decreasing coverage. Its major
conclusions included the following:
#3: Cost concerns are changing behaviors. Consumers cite costs
as reasons for delayed or neglected care, choices of doctors and
11
“2008 Survey of Health Care Consumers,” Deloitte Center for Health Solutions (February 19, 2008)
(available at http://www.deloitte.com/dtt/cda/doc/content/us_chs_ConsumerSurveyExecutiveSummary_
200208.pdf) (hereinafter, “Deloitte 2008”).
12
Deloitte 2008, at 16.
13
Health Access Data Assistance Center, University of Minnesota School of Public Health. (2009). At the
Brink: Trends in America’s Uninsured 1994-2007, A State-By-State Analysis. Minneapolis, MN (available
at http://covertheuninsured.org/files/u15/State_by_State_Analysis_2009.pdf).
14
“Study shows more people go without health coverage as insurance costs outpace income eight-fold,”
Cover The Uninsured - Press Releases (March 24, 2009) (available at http://covertheuninsured.org/
content/study-shows-more-people-go-without-health-coverage-insurance-costs-outpace-income-eight-fold).
15
Deloitte 2008, at 16.
16
Deloitte 2008, at 17.
17
Deloitte 2008, at 13
18
“2009 Survey of Health Care Consumers: Key Findings, Strategic Implications,” Deloitte Center for
Health Solutions (March 17, 2009) (available at http://www.deloitte.com/dtt/cda/doc/content/us_chs_
2009SurveyHealthConsumers_March2009.pdf) (hereinafter, “Deloitte 2009”).
3

4. hospitals, and selections of insurance programs. Across all
generations and income groups, escalating health care costs are a
concern driving many, even the well-insured, to fear the possibility
that an accident or circumstance beyond their control might
undermine their financial security.19
It should be noted that the survey reported by Deloitte in 2009 was completed by
October 10, 2008, a mere three weeks after the Lehman Brothers bankruptcy, only 30
days after federal authorities seized control of Fannie Mae and Freddie Mac, and before
the virtual collapse of the US auto industry. One can only wonder what the results would
be if the same survey was conducted in June 2009. Moreover, the US demographics
suggest that continuing financial concerns will lead to even further future increases in
outbound medical tourism. While the number of baby boomers entering their sixties is
frequently cited as a driver of outbound medical tourism,20 Deloitte found young adults
significantly more receptive to medical tourism than their elders.21
B. The Cost Differential
Recalling that Deloitte queried survey participants on the impact of a 50% cost
differential, reported data universally indicate that the lower cost of care outside the US
can not help but spur outbound medical tourism. One of the bestselling books on medical
tourism provides the following cost comparisons for the listed procedures, in both US
dollars and as a percentage of the US cost22:
Procedure US India Thailand Singapore Malaysia
CABG $130,000 $10,000 (8%) $11,000 (8%) $18,500 (14%) $9,000 (7%)
Hip Repl. $43,000 $9,000 (21%) $12,000 (28%) $12,000 (28%) $10,000 (23%)
Hysterect. $20,000 $3,000 (15%) $4,500 (23%) $6,000 (30%) $3,000 (15%)
The above-listed foreign care costs include only the surgery and hospitalization, without
travel or lodging. Conversely, the following inpatient surgery comparisons (in 2008 US
dollars) provided by Deloitte include travel costs in the lowest-average foreign-care
costs23:
Procedure US Price Average of 3 Lowest Foreign Prices
19
Deloitte 2009, at 13 (emphasis added).
20
Edelheit, J.S. (January 1, 2008). The US Healthcare Crisis Rising Supply of American Patients. Medical
Tourism Magazine, from http://www.medicaltourismmag.com/issue-detail.php?item=66&issue=3
21
“12% of Gen Y and 10% of Gen X say they would be likely to seek care outside the U.S., compared to
7% of Boomers and 6% of Seniors.” Deloitte 2009, at 9.
22
Woodman, J. (2008). Patients beyond borders: everybody’s guide to affordable, world class tourism (2nd
Ed.). Chapel Hill, NC: Healthy Travel Media (Complete costs table available from ABILITY Magazine at
http://www. abilitymagazine.com/pbb.html).
23
Deloitte Tourism, at 13.
4

5. Knee Surgery $11,692 $1,398
Hysterectomy $6,542 $2,114
3. The Medical Tourists
Medical tourists can be broken down into three somewhat overlapping groups: (i)
the uninsured and those with high-deductible plans; (ii) employees of self-funded
employers; and (iii) the fully insured.
Stories of uninsured patients traveling abroad for surgery so as to avoid financial
ruin are legion. The following are only three of the many examples found on the web site
of a single medical tourism facilitator, WorldMed Assist: angioplasty in Mexico; bilateral
hip replacement in India; and hip resurfacing in India.24
In January 2008, self-insured New England supermarket chain, Hannaford
Brothers, partnered with Aetna to offer its 27,000 employees the option to obtain hip or
knee replacements at National University Hospital in Singapore.25 To incentivize its
employees to utilize the outbound option, Hannaford Brothers agreed to waive all copays
and deductibles and to pay the travel costs of the employee and one traveling
companion.26 No employee utilized the option, but news coverage of the arrangement led
a provider to offer Hannaford a comparably priced option in another state, leading to an
intra-US arrangement.27
In November 2008, WellPoint, Inc. announced the Global Health Care
Partnership through a program with Serigraph, Inc. of Wisconsin. Under the program,
Serigraph’s 650 employees became eligible to receive elective orthopedic surgeries at
Apollo Health System hospitals in Bangalore and New Delhi, India, which facilities were
already members of the BlueCard Worldwide network.28 Unlike Aetna’s program with
Hannaford, the Global Health Care Partnership with Serigraph did not provide employees
with any incentives to utilize the program, although employers are permitted to do so.29
BlueCross BlueShield of South Carolina formed a subsidiary, Companion Global
Healthcare, to provide outbound medical tourism services to uninsured and underinsured
individuals, insurance companies, and, primarily, self-insured and employers. The
company does not offer BlueCross BlueShield of South Carolina or BlueChoice
HealthPlan products, but members with those products have access to its services. By
January 2009, Companion Global Healthcare had contracts with self-insured employers
24
Medical tourism testimonials. Retrieved May 17, 2009, from WorldMed Assist Web site:
http://www.worldmedassist.com/medical_tourism_testimonials.htm.
25
Carroll, J. (March 2008). Aetna and Hannaford Make a Singapore Connection. Managed Care (available
at http://www.managedcaremag.com/archives/0803/0803.overseas.html).
26
Einhorn, B. (November 9, 2008). Hannaford's Medical-Tourism Experiment. Business Week.
27
Id.
28
Meehan, C. (2009, January 7, ). WellPoint Is Latest Blues Plan to Invest in Medical Tourism. AIS's
Health Business Daily, Retrieved May 16, 2009, from http://www.aishealth.com/ManagedCare/
BluesNews/BLU_WellPoint_ Medical_Tourism.html (hereinafter “AIS”).
29
Id.
5

6. in three states (FL, CA, and SC), providing services to over 1.5 million employees.30
Companion Global also actively encourages employers to waive patient-responsible
amounts to pay travel costs for its employees’ outbound medical tourism.31
In June 2008, Companion Global Healthcare contracted with BasicPlus Health
Insurance of Roswell, Ga., to include a global healthcare network benefit for individuals
and employers enrolled in its fully-insured, limited benefit products.32 The fact that such
products provide specified benefit dollar maximums makes the reduced cost of overseas
healthcare particularly attractive to their enrollees.
Access Baja HMO by Blue Shield of California is another example of a fully-
insured medical tourism product. Under the product, employees and dependents receive
covered services in the Access Baja service area (including Tijuana and Mexicali,
Mexico and “in California, generally within a 50-mile radius from the U.S.- Mexico
border crossing points at San Ysidro and Calexico, CA”).33 The product can be paired
with other Blue Shield of California HMO, POS, and PPO plans, but can’t be the only
health plan offered.34 It is also offered as a “split family contract" option, which “allows
an employee working in California to enroll in a Blue Shield health plan in California,
while dependents living in Mexico enroll in an Access Baja HMO plan for coverage in
Mexico.”35
A two-country product raises interesting quality-of-care issues. Blue Shield of
California’s written materials regarding Access Baja HMO illustrate the fences that must
sometimes be straddled. Thus, its Employer Brochure specifically addresses credentialing
as follows:
All Access Baja HMO network physicians are licensed to practice
in Mexico, are in good standing with their local medical society,
and are registered to practice in Baja California. Network hospitals
are licensed by the state of Baja California and certified by the
Mexican National Commission on Hospital Certification.36
However, its web page for producers includes the caveat: “All Access Baja providers
must comply with applicable Mexican laws and regulations governing the practice of
medicine. Members who enroll in our Access Baja plans should be comfortable with
30
Id.
31
Id.
32
(2008, June 4). Insurance company global network option in limited benefit plans. Retrieved May 26,
2009, from Companion Global Healthcare, Inc. NEWS Web site: http://www.companionglobalhealthcare
.com/news.aspx.
33
Blue Shield of California. (2007). BlueShield speaks your language [Brochure]. San Francisco, CA
(hereinafter, “Baja”).
34
Baja, at 2.
35
Id.
36
Baja, at 4.
6

7. Mexican medical practice standards and quality of care.”37 A linked page expresses the
caveat more forcefully: “Any member who is not completely comfortable with the
standards of care for the practice of medicine in Mexico should not enroll in Access Baja
plans.”38 The same page also excludes the following services from those covered only
when performed in Mexico: “severe burns, acute rehabilitation, neonates requiring
continuous cardiopulmonary support, pediatric cardiovascular and thoracic surgery and
critical trauma cases.”39
4. The Non-Medical Tourists
To date, members of the fastest growing portion of the US population – Medicare
beneficiaries – are legally excluded from outbound medical tourism by 42 C.F.R. §
411.9(a). That section states the “basic rule” that “Medicare does not pay for services
furnished outside the United States.” Subsection 1 then defines “United States” as “the 50
States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American
Samoa, The Northern Mariana Islands, and for purposes of services rendered on board
ship, the territorial waters adjoining the land areas of the United States.”
5. Other Players in Medical Tourism
As indicated in the preceding discussion, outbound medical tourism involves
parties other than plans and providers, including medical tourism facilitators or
packagers, quality rating and accrediting agencies, and liability insurers.
A. Facilitators and Operators
Medical tourism facilitators and operators serve as interfaces between individuals,
employers, and plans on the one hand and foreign providers, including both professionals
and facilities. In many cases, the providers pay the facilitators a percentage of the cost of
the medical care they provide. In other cases they are paid by the employer or plan of the
employees or enrollees receiving the care. As noted above, a number of medical tourism
operators are wholly owned subsidiaries of plans, e.g., Companion Global Healthcare, a
subsidiary of BlueCross BlueShield of South Carolina, and Global Health Care
Partnership, owned by WellPoint, Inc.
Other facilitators are independent of any particular plan and form varying types of
network arrangements with foreign providers. Two examples, out of many, include the
previously mentioned WorldMed Assist and BridgeHealth International. WorldMed
Assist contracts with providers in India, Turkey, Belgium and Mexico, including Anadolu
37
Access Baja HMO and Dependent Plan. Retrieved May 16, 2009, from Blue Shield of California
Producer Connection Plans & Rates Web site: https://www.blueshieldca.com/producer/largegroups/
products/health/baja.
38
Medical Care In Mexico. Retrieved May 16, 2009, from Blue Shield of California Producer Connection
Plans & Rates Web site: https://www.blueshieldca.com/producer/largegroups/products/health/baja/
medical.jhtml.
39
Id.
7

8. Medical Center, which is affiliated with Johns Hopkins.40 Those provides offer a wide
range of surgical services, including orthopedic and spinal, cardiology, weight loss,
cholecystectomy, prostatectomy; liver and kidney transplants, cosmetic procedures, and
cyberknife cancer treatment.41
BridgeHealth International claims the title of “largest medical travel network in
the world.”42 It arranges medial services in Brazil, Mexico, Taiwan, China, Panama,
Thailand, Costa Rica, Singapore, Turkey, India, and South Korea.43 Typical of many
larger facilitators, BridgeHealth negotiates prices with providers and provides
administrative services, such as locating providers, scheduling and coordinating travel,
accommodations and payment arrangements.
B. Quality Rating and Accreditation Entities
Recall that Deloitte’s estimated numbers of willing, potential outbound medical
tourists were calculated on the stated assumption that “the quality was equal to or better
than what they [could] have in the US.”44 Accreditation by the Joint Commission
International (“JCI”) has become the most common proxy for quality. JCI was formed in
1994 as the international affiliate of the Joint Commission, which accredits US hospitals
and health care organizations for compliance with Medicare Conditions for
Participation.45 In 2000, JCI published its first set of international quality standards for
hospitals and presented its initial accreditation award.46 In 2007, JCI became accredited
by the International Society for Quality in Health Care (ISQua), a body which surveys
and accredits international accreditation agencies.47
To date, JCI has accredited more than 220 healthcare organizations in at least 33
countries.48 Given the large number of accreditations and an average cost of accreditation
of only $42,000 in 200849, some have questioned just how meaningful JCI accreditation
is. Nonetheless, it remains the most commonly cited quality indicator for outbound
medical tourists.
40
(2009). Hospitals and Doctors Abroad. Retrieved May 16, 2009, from WorldMed Assist Quality Surgery
Abroad Web site: http://www.worldmedassist.com/hospitals_doctors.htm.
41
(2009). Procedures. Retrieved May 16, 2009, from WorldMed Assist Quality Surgery Abroad Web site:
http://www.worldmedassist.com/procedures.htm.
42
(2009). Individuals - the largest travel network in the world...right at your fingertips. Retrieved May 16,
2009, from BridgeHealth International The Trusted Bridge to World-Class Healthcare Web site.
http://www.bridgehealthinternational.com.
43
(2009). Explore our destinations – the world-class provider network. Retrieved May 16, 2009, from
BridgeHealth International The Trusted Bridge to World-Class Healthcare Web site.
44
Supra, note 18.
45
(2009). A journey through the history of the Joint Commission,. Retrieved May 16, 2009, from The Joint
Commission - About Us Web site: http://www.jointcommission.org/AboutUs/joint_commission
_history.htm).
46
Id.
47
Id.
48
(2009). About Joint Commission International. Retrieved May 16, 2009, from Joint Commission
International - About JCI Web site: http://www.jointcommissioninternational.org/About-JCI/ .
49
(2009). Costs of Accreditation. Retrieved May 16, 2009, from Joint Commission International –
Accreditation and Certification Process JCI Web site: http://www.jointcommissioninternational.org/
8

9. Other quality rating and accreditation entities include the Trent Accreditation
Scheme (UK), the International Organization for Standardization (“ISO”), and the
European Society for Quality in Healthcare (“ESQH”).50
C. Liability Insurers
For reasons discussed in greater detail below, providers of specialized liability
insurance are playing an increasingly larger role in medial tourism, to the benefit of
multiple players. Medical tourism facilitators have been partnering with liability insurers
in an effort to assuage patient concerns regarding their potential inability to obtain legal
relief from foreign providers in the event of poor outcome. Companion Global
Healthcare’s website,51 for example, advises agents that employers and their employees
can purchase specialized travel insurance from independent insurer, Global Protective
Solutions. The insurance is described as covering “accidents or unintended outcomes
resulting from medical procedures … at a Companion Global Healthcare network
facility” and as providing cash benefits.”52 It is administered and brokered by Custom
Assurance Placements Ltd. (http://www.customassurance.com).
For medical tourists, Seven Corners, a privately held insurance company
headquartered in Carmel, Indiana, offers Bordercross WorldwideSM Medical Procedure
Insurance, underwritten by Certain Underwriters at Lloyd’s, London. In addition to
typical trip cancellation and interruption coverage, it also provides one of three levels of
coverage ($10,000/$20,000/ $50,000) for medical complications derived from scheduled
procedure.53 The policy is clearly intended to address potential malpractice inasmuch as it
“covers additional medical complications including: cardiopulmonary complications,
pulmonary emboli, infection, shock, foreign objects left in patient, hemorrhage, severe
hypotension and hypertension, pneumonia or sepsis.”54 Significantly, covered “corrective
or follow-up treatment” is to be provided at “any facility within the Seven Corners
network worldwide.”55 Copies of the sales brochure and actual policy form are available
online.56
Global reinsurer, Swiss Reinsurance Company Ltd., now recognizes medical
travel coverage in the stop-loss insurance it offers to its self-funded employer clients.
50
Deloitte Tourism, at 8.
51
(2009). Agents - travel insurance. Retrieved May 16, 2009, from Companion Global Healthcare, Inc.
Web site: http://www.companionglobalhealthcare.com/agents/travelinsurance.aspx.
52
Id.
53
(2008). bordercross worldwide 2008/2009 [Brochure]. Carmel, IN.
54
Id.
55
Id.
56
Brochure available at http://www.sevencorners.com/brochure/BordercrossWorldwide_2008.pdf. Policy
available at http://www.sevencorners.com/forms/BordercrossWorldwideMedicalTourismPlanCertificate
ofInsurance.pdf.
9

10. Significantly, the coverage is “coordinated with the employer’s primary policy and with
the patient’s primary physician in the U.S.”57
Clements International has designed and offers insurance coverage specifically
for medical tourism operators and facilitators. In addition to trip cancellation coverage,
the company offers operators both professional liability insurance and personal accident
insurance. The former covers claims where the “facilitator is sued for unintentional
misrepresentation of information or a negligent act,” such as libel and slander, joint
venture liability, and vicarious liability claims.58 “Personal Accident coverage pays a pre-
agreed upon amount if the medical tourist is permanently disabled or dies during the trip.
This immediate compensation may also dissuade the beneficiaries from engaging in a
tedious and costly litigation process.”59
6. Implications of Outbound Medical Tourism for US-Based Providers
A. Revenue Loss and Price Competition
Without doubt, the single greatest impact of outbound medical tourism on US-
based providers is the one-two punch of revenue loss and price competition. Earlier
portions of this paper focused upon the number of outbound medical tourists. Translating
those numbers into dollars greatly clarifies the financial impact upon US providers. The
Deloitte Medical Tourism study concluded that the estimated 750,000 outbound medical
tourists in 2008 represented between $2.1 and $2.4 billion spent by US residents
overseas, and that, assuming 3% annual cost inflation, the projected 15.75 million
medical tourists in 2017 would represent between $30.3 and $79.5 billion spent by US
residents overseas.60 Those figures are dwarfed, however, by the corresponding lost
opportunity costs. Deloitte estimated the lost revenue for US healthcare providers at
between $15.9 and $17.9 billion US dollars in 2008, and between $228.5 and $599.5
billion (with a “b”) US dollars in 2017.61
Assuming that foreign providers can provide documented empirical evidence of
continuing quality improvements and results, it is reasonable to anticipate that some plans
may institute carve-outs from their standard provider participation agreements under
which specified services will be provided exclusively at foreign “centers of excellence,”
as they historically have done with select US-based providers.
If the Hannaford Brothers experience is not a mere anomaly, the massive
projected revenue losses are likely to also generate more heated price competition by and
among US providers in an effort to stem the reduction in available patients and to attract
57
(2009). Swiss Re's commercial insurance launches medical travel insurance offering. Retrieved May 16,
2009, from Companion Global Healthcare, Inc. Web site: http://www.worldmedassist.com/medical_
tourism _insurance_swiss_re.htm.
58
(2009). Insurance solutions for the medical tourism industry. Retrieved May 16, 2009, from Clements
International Global Insurance Solutions Web site: www.insuranceformedicaltourism.com.
59
Id.
60
Deloitte Tourism, at 14.
61
Deloitte Tourism, at 15.
10

11. and retain those patients who remain. Within less than one year after Hannaford Brothers
announced its medical tourism arrangement with Aetna, a US-based provider unilaterally
contacted Hannaford and offered to provide the same orthopedic services at a similar,
competitive price within the US. Given that experience, is there much basis for belief that
the “offshoring” of medical care will have consequences completely different from those
of other industries subjected to offshoring?
Takeaway: When faced with purported wide variations in cost of care,
carefully calculate the true cost of your provider client’s services net of contractual
discounts, rather than “charges,” the complete cost of foreign medical care,
including travel, lodging, and “extras” fees and charges that are common in practice
but infrequently highlighted in medical tourism proposals.
B. Continuity of Care Problems for After-Care Providers
Unless they are deeply involved with the foreign care from the outset, physicians
whose patients engage seek surgical or other medical care abroad may encounter
continuity-of-care obstacles. Depending upon the particular foreign care provider and, in
many cases, upon whether a medical tourism operator (and if so, how experienced), a
physician may, for example, have difficulties obtaining complete medical records related
to the patient’s surgical procedure and post-operative recovery, or in communicating with
the foreign care providers to resolve treatment questions or concerns.
Takeaway: Providers with patients seeking care overseas should keep HIPAA
in mind; carefully document all records, films and related information they provide
to their patient and to any foreign provider or medical tourism facilitator, including
detailed information regarding the specific recipients, and ensure that originals or
copies are retained by the provider.
C. Potential Liability for Pre-Travel Evaluations and Testing
Some medical tourism operators and foreign-based providers contract with US-
providers for the provision of pre-travel medical examinations, evaluations, and testing.
As with any patient, a missed co-morbidity or an overlooked lab result could result in
malpractice liability for US provider. The fact that the patient’s condition could change
dramatically during or as the result of lengthy air travel only heightens the exposure. The
involvement of foreign co-defendants poses for pre-travel providers many of the same
problems discussed below for after-care providers and plans. Takeaway: Any contract
for the provision of pre-travel medical examinations, evaluations, and/or testing
should include provisions for meaningful indemnification of the US provider. The
provider should also ensure that his or her medical liability insurance will provide
coverage for claims arising out of those services.
Truly US-bound providers must also be mindful of potential payor coverage
exclusions related to pre- and post-travel services. As noted previously, Medicare does
11

12. not pay for services furnished outside the United States.62 As such, submission of a claim
for payment for a service or component thereof that was not performed wholly within the
US may subject the US provider to False Claims liability.
On a related issue, providers must also review the terms of any payor participation
agreement applicable to their pre- and post-travel care of the medical tourist to ensure
that their care complies with the following “Off-Shore” clause or one similar to it:
Provider shall not, in connection with any functions,
activities or services related to the Agreement, directly or
indirectly contract with any person or entity that undertakes
any functions, activities or services, including, without
limitation, storage of Medicare Advantage information,
outside of the United States of America without the prior
written consent of Plan.
Takeaway: Services related to medical tourism may also require analysis of
telemedicine and licensure issues, the details of which are beyond the scope of this
paper. As with most potential compliance issues, however, discretion is the better
part of valor.
D. Litigation Issues for After-Care Providers
The discussion of outbound medical tourism’s implications for plans, infra,
addresses a number of legal issues likely to arise in any litigation related to injuries
sustained during or as the result of medical tourism. Many of the potential problems that
pose continuity-of-care issues for a medical tourist’s after-care provider also pose serious
tactical challenges for that provider’s defense of any professional liability action brought
by the medical tourist or her estate. These include difficulties in conducting meaningful
discovery, such as depositions and document and records reviews due to personal
jurisdiction and subpoena power problems. Even when those issues can be overcome,
they are likely to increase costs, potentially significantly.
Takeaway: Just as general corporate lawyers are not the best equipped to
handle complex health law issues, providers faced with litigation arising out of
medical tourism will be best served by counsel with experience in cases involving
residents of multiple countries and choice-of-law issues.
Takeaway: Sometimes dark clouds do have silver linings. Consider whether
and how applicable law may provide your client an “empty-chair defense.”
62
42 C.F.R. § 411.9(a).
12

13. 7. Implications of Outbound Medical Tourism for US Plans
A. Revenue Loss and Price Competition
Unsurprisingly, outbound medical tourism also poses revenue and price issues for
US health plans. If an increasing number of plans pursue medical tourism in earnest, the
resulting cost savings for their enrollees and employer customers will undoubtedly create
price competition between plans, forcing their competitors to either also jump on the
medical tourism bandwagon, develop alternative means of achieving similar cost-savings,
or yield market share to the plans who are able to successfully incorporate medical
tourism into their product offerings.
Additionally, as Deloitte noted, enhanced revenue from increased market-share
may be partially offset by the need to reduce premiums and fees for groups who send a
significant number of their members overseas for care.63
Takeaway: This may be one area to avoid the bleeding edge. Plans that jump
the gun and implement medical tourism programs without substantial employer
buy-in, may find the greatest costs of medical tourism were self-imposed.
B. Ensuring Adequate Pre- and Post-Travel Care
For the reasons previously noted in the discussion of outbound medical tourism’s
implications for providers, particularly until there is industry-wide acceptance of medical
tourism, plans should expect a fair amount of difficulty in ensuring that their medical
tourist enrollees receive appropriate pre-travel evaluation and care and are able to obtain
adequate follow-up care upon their return home. Indeed, the new AMA Guidelines on
Medical Tourism include the following provisions:
(d) Prior to travel, local follow-up care should be coordinated
and financing should be arranged to ensure continuity of
care when patients return from medical care outside the US.
(e) Coverage for travel outside the U.S. for medical care must
include the costs of necessary follow-up care upon return to
the U.S.64
In an effort to address such concerns, in September 2008, medical tourism
facilitator BridgeHealth International contracted with Passport Health, the largest US
provider of travel medical services. In a press release, BridgeHealth claimed that the
arrangement allowed it to offer “the Passport portfolio of comprehensive pre- and post-
travel medical services that include destination-specific travel information, travel
medicine immunizations, specialty travel products, and international travel health
63
Deloitte Tourism, at 25.
64
AMA Guidelines on Medical Tourism (June 2008) (available at http://www.ama-assn.org/ama1/
pub/upload/mm/31/medicaltourism.pdf).
13

14. insurance.”65 While indicating that Passport Health would provide “any necessary follow-
up care and services,” the exact nature of any post-travel care that it would actually
provide was unclear inasmuch as all of the expressly listed services, other than providing
information on medical evacuation, were of the pre-travel variety.66
Takeaway: All proposed medical tourism arrangements should be
scrutinized to ensure that they include detailed provisions for follow-up treatment
and that such follow-up is scheduled before any travel actually occurs.
C. ERISA Liability
An in-depth analysis of the impact of the Employee Retirement Income Security
Act of 197467 (“ERISA”) upon medical tourism is clearly beyond the scope of this paper.
It is clear, however, that outbound medical tourism arrangements pose exposure for
employee health plan sponsors under ERISA. Plan sponsors have fiduciary obligations
that include, inter alia, acting solely in the interest of plan’s participants and their
beneficiaries with the exclusive purpose of providing benefits to them, and carrying out
their duties prudently.68
Within the context of a medical tourism, the plan sponsor must, at minimum, (i)
ensure that the inclusion of a medical tourism benefit is implemented in the best interests
of the plan’s participants and not merely to reduce the employer/sponsor’s overall benefit
costs; (ii) act prudently in the selection of plan service providers; and provide participants
with adequate and accurate information.
Steps to reduce the likelihood of conflict-of-interest claims against plan sponsors
might include: (i) balancing financial incentives for use of foreign providers against the
potential additional risks participants might incur by using them; (ii) avoiding special
endorsement of foreign providers over equally qualified domestic providers; (iii)
avoiding any plan provision that would mandate the use of foreign providers or otherwise
infringe upon participants’ freedom of choice; and (iv) clearly communicate the
additional issues posed by medical tourism and document those communications.
Takeaway: Plan sponsors may wish to include within their medical tourism
arrangements additional insurance with coverage for special risks posed by medical
tourism.69
65
“BridgeHealth partners with Passport Health to provide continuum of care for medical travelers,”
BridgeHealth International (September 8, 2008) (available at http://www.bridgehealthinternational.
com/corporate/press-releases/bridgehealth-partners-with-passport-health.html).
66
Id.
67
29 U.S.C. § 1001 et seq..
68
The U.S. Department of Labor has published a plain-language, online guide , entitled “Understanding
Your Fiduciary Responsibilities Under A Group Health Plan,” that may be useful in helping employer
clients better understand their ERISA obligations. It is available at http://www.dol.gov/ebsa/publications/
ghpfiduciaryresponsibilities.html.
69
See, e.g., the discussion of liability insurers in Section 5.C, supra.
14

15. Takeaway: Plan sponsors should exercise due diligence in credentialing both
professional and facility foreign providers; carefully document their credentialing
process and decision-making; and engage in ongoing provider monitoring activities.
D. Malpractice Liability
Malpractice litigation arising out of medical tourism arrangements poses a
veritable bar exam’s-worth of legal issues, many of which, alone, could easily support
session of their own. First and foremost, the malpractice law and practice of many
medical tourism host countries is enormously different from that in the US. For example,
it was not until 1992, that India extended application of its 1986 Consumer Protection
Act to medical malpractice and negligence cases. Those cases are now heard by “special
consumer courts,” and awards are limited to actual damages.70 Moreover, Indian
attorneys are prohibited from taking contingency cases.71
Potential theories of liability in medical tourism malpractice cases against plans
and employers include corporate negligence, lack of informed consent, and vicarious
liability.72 Liability waivers may successfully preclude vicarious liability claims, if they
include express acknowledgements of the independence of the actual healthcare providers
and the lack of any agency or control relationship between that provider and the plan or
employer.73 Takeaway: Before taking false comfort in a medical tourist’s liability
waiver, carefully review the law of the applicable jurisdiction as some hold waivers
of medical malpractice liability void and unenforceable in either some or all
circumstance.74
The threshold issue in many medical tourism malpractice cases is whether the
court in which suit was filed has or can obtain personal jurisdiction over the defendant(s).
Many foreign medical tourism providers have gone to great lengths to avoid the
minimum contacts necessary to support personal jurisdiction under state long-arm
statutes. Many, for example, have refused to open an office or agency within the US
despite the potential increase in volume it might generate, instead conducting all of their
marketing and business transactions via the web. As with most things IT-related,
however, the law in this regard is changing, with some courts now holding that Internet
business may support jurisdiction.75
70
Bashir Mamdani, Medical Malpractice, 12 Indian J. Med. Ethics 2 (available at
http://www.issuesinmedicalethics.org/122ss057.html).
71
Id.
72
See Philip Mirrer-Singer, Medical Malpractice Overseas: The Legal Uncertainty Surrounding Medical
Tourism, 70 Law & Contemp. Probs. 211, 217-221 (Spring 2007).
73
Mirrer-Singer, supra, note 41, at 220-221 (discussing Espalin v. Children’s Medical Center of Dallas, 27
S.W.3d 675, 684-85 (Tex. Ct. App. 2000)).
74
See, e.g., Cudnik v. William Beaumont Hospital, 525 N.W.2d 891, 896 (Mich. Ct. App. 1994). See also
Tunkl v. Board of Regents of University of California, 383 P.2d 441 (Cal. 1963).
75
E.g., CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996) (contracts involving knowing and
repeated transmission of computer files over the Internet can support personal jurisdiction).
15

16. Public policy arguments frequently play a role in resolving medical tourism
jurisdiction issues. Some courts, for example, hold that the ability of residents to obtain
access to medical care while traveling elsewhere outweighs the purported malpractice
deterrence that would occur by allowing the tourist to file suit at home for malpractice
during medical care abroad.76
Conflict of laws issues frequently arises in medical tourism malpractice cases.
While not universally enforced, many medical tourism providers insist that potential
patients submit in writing to the exclusive jurisdiction of the law and courts of the foreign
provider’s country. Given that the laws of most current medical tourism hotspots are not
particularly favorable to plaintiffs, plans may be tempted to execute similar agreements;
however, the downside to doing so may become readily apparent in the event of any other
dispute between the plan and the provider. Takeaway: Plans may be better served by
insisting upon indemnification by the providers for any liability arising out of the
care or treatment of a participant, and that the law and courts of the plan have
exclusive jurisdiction over any claims against the plan and over any claims by the
plan for indemnification.
E. Tax Issues
Takeaway: Plans and employers must carefully consider the tax
consequences of any proposed medical tourism arrangement, particularly with
respect to any special incentives designed to make foreign care more attractive to
participants. Such incentives can run the gamut from waiver of deductibles and
coinsurance, to payment of all travel expenses for the employee and a companion, to
substantial cash or cash-equivalent incentives.
For example, payment of the patient’s lodging and meals may be a non-taxable
benefit to the employee if he obtains services as an inpatient, but may be taxable to the
employee if the same services are obtained on an outpatient basis.77 Conversely, the
lodging and meals of the employee patient’s companion would generally be taxable to the
employee. Similarly, travel expenses may be deemed to be a taxable benefit to employee
if the travel was not medically necessary, because the care could be obtained elsewhere
without travel.78
Employers seeking to promote medical tourism might be willing to share a
portion of the resulting savings with employees who participate and receive care abroad.
That is the key feature of the new “health & Shared Wealth Program” created by
agreement between medical tourism facilitator, Satori World Medical, and P5 Health
Plan Solutions, a TPA for self-funded health plans. Plan employees electing to receive
76
Mirrer-Singer, supra, note 41, at 215.
77
See IRS Publication 502 (2008) (available at http://www.irs.gov/publications/p502/ar02.html#en_US_
publink100014906).
78
Marlowe, J, Sullivan, P (2007, June 1). Medical tourism: the ultimate outsourcing. Human Resource
Planning, Retrieved May 16, 2009, from http://www.entrepreneur.com/tradejournals/article/
166051334_2.html
16

17. care from the Satori Global NetworkTM “will receive thousands of dollars deposited into
an employer-funded, tax-advantaged Health Reimbursement Account.”79 Were the
plan/employer to instead pay the employee his share of the savings in cash, the funds
would almost certainly be deemed taxable to the employee.
F. International Instability – Political and Economic
As McKinsey succinctly stated, “Geopolitical events can quickly impact patient
80
flows.” Everything from currency fluctuations, to terrorist attacks, to healthcare policy
changes, to unemployment rates can impact the number of medical tourists and the
destinations to which they will or will not travel. Mr. Rowan will share his experiences
with the impact of 9/11 on inbound medical tourism. While accurate data are not yet
available, one can logically anticipate that the H1N1 flu outbreak of 2009 will be shown
to have a depressing impact upon outbound medical tourism to Mexico.
On the health policy front, South Korea recently suppressed inbound medical
tourism by limiting “foreign patients to no more than five percent of its hospital beds, to
ensure domestic patients do not lose out.”81 Conversely, the Singapore government has
recently undertaken extensive efforts to enhance its continued growth as a medical
tourism destination.
G. US Provider Relations
Numerous events over the past 4-5 years have both strained and fostered provider-
plan relations. While the near-term future may see rapid expansion in outbound medical
tourism, plans will require more providers at home than abroad. Plans must therefore
balance the potential gains to be derived from medical tourism against their potential
impact upon plan-provider relations. If only the most healthy travel to obtain care abroad,
how long will US providers be able to maintain margins adequate to support the high
quality care that US consumers have come to expect at home?
Conclusion
While mitigating factors exist, the overall stage appears to be set for substantial
near-term growth in outbound medical tourism. The wildcard at this point appears to be
whether and what type of near-term healthcare reform will occur. Regardless, it is
difficult to imagine a scenario under which medical tourism would revert to its cosmetic-
surgery-in-paradise roots any time soon. The implications for providers and plans are a
mixture of both challenges and potential, with both sides likely to realize gains and
losses. As with most aspects of modern healthcare, it appears that the only thing certain is
continued uncertainty.
79
“Satori World Medical signs deal with third party administrator P5 Health Plan Solutions to bring its
Global Health Network to P5’s self-funded employers,” (April 15, 2009), Satori World Medical (available
at http://www.satoriworldmed.com/content.php?id=85).
80
McKinsey, at 7.
81
“Medical tourism: Have illness, will travel,” CNNhealth.com, March 26, 2009.
17

18. Outbound Medical Tourism Select Bibliography and Resources
a. Medical Tourism Association, Inc. (www.MedicalTourismAssociation.com) -
nonprofit organization made up of hospitals, insurance companies, health care
companies, medical tourism companies, and facilitators that cater to traveling
patients. Lists facilitators vetted by the association; matches medical needs with
overseas hospitals and physicians; makes travel, lodging, visa and local transportation
arrangements; handles billing; and helps arrange follow-up care.
b. Deloitte Center for Health Solutions
http://www.deloitte.com/centerforhealthsolutions
i. “Medical Tourism: Consumers in Search of Value,” Deloitte Center for Health
Solutions (April 14, 2009) (available at
http://www.deloitte.com/dtt/cda/doc/content/us_chs_MedicalTourismStudy%28
3%29.pdf)
ii. “2009 Survey of Health Care Consumers: Key Findings, Strategic Implications,”
Deloitte Center for Health Solutions (March 17, 2009) (available at:
http://www.deloitte.com/dtt/cda/doc/content/us_chs_2009SurveyHealthConsume
rs_March2009.pdf)
iii. “2008 Survey of Health Care Consumers,” Deloitte Center for Health Solutions
(February 19, 2008) (available at
http://www.deloitte.com/dtt/cda/doc/content/us_chs_ConsumerSurveyExecutive
Summary_200208.pdf)
c. Joint Commission International (http://www.jointcommissioninternational.org/) -
reviews both American and international medical and dental facilities, using United
States standards.
d. AMA Guidelines on Medical Tourism (June 2008) (available at http://www.ama-
assn.org/ama1/pub/upload/mm/31/medicaltourism.pdf)
e. Medical Care Outside the United States, Report Of The American Medical
Association Council On Medical Service (2007) (available at http://www.ama-
assn.org/ama1/pub/upload/mm/372/a-08cms1.pdf)
f. Centers for Disease Control and Prevention Travelers’ Health: Yellow Book -
Seeking Health Care Abroad (available at:
http://wwwn.cdc.gov/travel/yellowBookCh2-HealthCareAbroad.aspx)
g. WorldMed Assist (http://www.worldmedassist.com) - medical tourism
provider/packager
18

19. h. Philip Mirrer-Singer, Medical Malpractice Overseas: The Legal Uncertainty
Surrounding Medical Tourism, 70 Law & Contemp. Probs. 211, 212 (Spring 2007).
i. Global Protective Solutions (http://www.customassurance.com) - specialty travel
insurance covering accidents or unintended outcomes resulting from medical
procedures at a Companion Global Healthcare network facility and providing cash
benefits. Administered and brokered by Custom Assurance Placements Ltd.
j. Marlowe, J, Sullivan, P (2007, June 1). Medical tourism: the ultimate outsourcing.
Human Resource Planning, Retrieved May 16, 2009, from
http://www.entrepreneur.com/tradejournals/article/166051334_2.html
k. Patients Beyond Borders Everybody’s Guide to Affordable, World-Class Medical
Tourism (2nd Ed), Joseph Woodman, Healthy Travel Media (July 2008).
i. Existing special editions: Korea Edition, Singapore Edition, Singapore
Arabic Edition, Taiwan Edition.
ii. Forthcoming editions: India Edition (June 2009), Malaysia Edition (July
2009), Turkey Edition (Fall 2009).
19