Shareef Mahdavi helps doctors be smarter when it comes to their practice.  His blog covers financial, customer and technology topics.

BLOG: Disrupting your surgical referrals

One concern shared with me by eye surgeons is what would happen to surgical volume if referral sources are pulled away. That threat may still be far off in the distance, depending on M&A activity and consolidation in optometry (see my blog “Big money enters eye care” for details).

But reading an article in The New York Times brought another potential disruptor to light: U.S. citizens traveling abroad for surgery. Now before you dismiss this since you have known for years that some people will travel (eg, to Canada or Mexico for LASIK, ironically able to get more advanced technology than what the FDA has allowed here), pay attention to the main thrust of this article.

The article highlights a U.S. orthopedic surgeon (trained at the Mayo Clinic, practices in Wisconsin) who travels to Cancun to perform surgery at a private hospital. The patient’s health insurance not only covered the procedure cost but the company employing her husband also paid the patient $5,000 and covered all travel costs. The surgeon flew down and back in less than a day and was paid three times what Medicare would have reimbursed. And the company (Ashley Furniture Industries with 17,000 employees) has saved over $3 million in health costs in the past 3 years with 150 employees so far traveling abroad for surgery.

What is noteworthy is that this is not a one-off case; an entire industry is developing to support lower cost surgery, replicating with scalability the same functions required here, including North American Specialty Hospital (NASH; regulatory) and IndusHealth (scheduling, presurgical approvals and travel). NASH’s CEO understood the perceived barriers to medical tourism and has built a business that maintains U.S. medical malpractice insurance.

The net-net is that surgery can be done this way for about half of the cost in the U.S., including savings on the implanted device, which costs far less outside the U.S. Patient satisfaction seems to be high, and it is clear from the article that having a U.S.-based doctor perform the surgery was a key factor.

The U.S. system is sufficiently broken that traveling outside the U.S. for surgery may become cheaper, better (and perhaps faster) than the traditional approach. This is disruptive, and you should stay aware of developments here and determine how this can ultimately impact the value and viability of your practice.

 

Reference:

Galewitz P. A Mexican hospital, an American surgeon, and a $5,000 check (yes, a check). The New York Times. https://www.nytimes.com/2019/08/09/business/medical-tourism-mexico.html.

 

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