Employers are continually looking for ways to reduce their health care costs. Some have even contracted with health care providers in other countries to provide care at a cost far less than the same procedures in the U.S.
However, for employers uncomfortable with sending employees overseas for medical care, there is another option—sending employees to medical facilities in the U.S. that can provide care at a lower price than local doctors and hospitals.
Retailer Lowe’s Companies Inc. made headlines in 2010 when it began a domestic medical travel program for its employees. The company has an arrangement with the Cleveland Clinic to provide cardiac treatment to Lowe’s employees and is expanding the program to cover other types of surgeries (to learn more about the success of the program at Lowe's Companies, see the box at the end of this article).
Domestic health care travel is not limited to large companies like Lowe’s, which has more than 150,000 employees. Domestic travel can be an attractive option no matter what size an employer’s covered population is. Small companies can work with specialized vendors who contract with providers and facilitate the travel process.
There are a number of vendors that provide access to reduced-cost domestic providers for procedures and treatments. Because these vendors are able to steer a certain number of cases to specific medical service providers, they can negotiate better rates than an individual employer might be able to do.
For many years, employers' health plans have brought patients to "centers of excellence" that handle certain organ transplants. Taking that concept to the level below transplants, the same model can be used for nonemergency surgeries and treatments, such as knee and hip replacements, cardiac surgery, spinal surgery and hysterectomies, said Vic Lazzaro, CEO of BridgeHealth in Greenwood Village, Colo.
Helping the Bottom Line
Self-insured employers are most likely to use domestic travel to reduce their employee health care costs. Fully insured employers would have to wait for a renewal to see if the savings were large enough to be reflected in their premiums. “If a self-insured employer saves $65,000 on a heart valve replacement, those dollars drop right to the bottom line and they will see those savings within a month or two,” said David Boucher, president of Companion Global Healthcare, a health care travel company in Columbia, S.C.
Here are some issues to consider when it comes to setting up a domestic medical travel program:
Evaluate alternative options and quality metrics. Attention to quality is critical. After all, a key selling point for domestic travel from an employee’s perspective is the opportunity to gain access to care that is at least as good as care that is available locally.
At a minimum, facilities should be accredited by The Joint Commission, an independent organization that accredits and certifies health care organizations and programs, including disease-specific care and a health care organization’s staffing.
Employers relying on a medical travel vendor to manage their domestic travel program should understand how vendors choose and evaluate the health care providers in their networks, including whether they conduct on-site visits, solicit feedback from patients, and evaluate providers at regular intervals. It is important to understand what clinical criteria and metrics these evaluations involve.
“The real value proposition is that there are high-quality options at potentially much lower cost outside of an employer’s immediate geographic area,” said Boucher. “We work with employers to help them understand that so that they think seriously about creating incentives for employees to use those options.”
Considering offering an incentive. On its own, traveling domestically to receive medical care might not appeal to a lot of employees. After all, any need for medical care can be fraught with stress and anxiety. Not surprisingly, some individuals and family members are reluctant to add the stresses of travel and an unfamiliar setting away from home to the situation.
Recognizing that employees and family members might not be willing to travel to another city, even if it's in the U.S., for care, many employers:
• Create incentives by waiving deductibles and co-pays for individuals who elect to travel.
• Pay for airfare and hotel accommodation.
• Provide a per-diem allowance to cover meals and other expenses.
Some employers share 10 percent of any cost savings with any employee who travels for care. Other employers structure the incentive as a flat dollar amount determined by the procedure involved.
“Some companies pay a larger incentive for a more significant procedure, such as cardiac procedure, and a smaller incentive for a less expensive procedure, like a hysterectomy,” said Lazzaro.
Communicate and promote the program. Once an employer has chosen providers and created any incentive for employees who use the travel program, the next step is to explain the program to employees and to promote its voluntary use. Some employers take a significant amount of time between the decision to offer a domestic medical travel program and arranging the first trip to ensure that employees are fully aware of and comfortable with the program. This approach allows employees to get used to the idea of domestic travel for medical care and avoids any appearance that the company is pushing the program onto employees.
From the beginning, this communication should:
• Emphasize that the domestic travel program is optional.
• Provide a detailed breakdown of how the program will work, including available support in the destination city and what costs the employer will cover.
• Clearly lay out what employees stand to gain by participating in the plan—whether that is higher quality care, a monetary incentive or both.
If an employer is waiving or reducing out-of-pocket costs for participating employees, it's a good idea to provide a comparison of what employees will pay for local care vs. care that requires domestic travel.
Joanne Sammer is a New Jersey-based business and financial writer. Her articles have appeared in a number of publications, including HR Magazine, Business Finance, Consulting, Compliance Week and Treasury & Risk Management.
At Lowe's Companies, Raves from Employees
Lowe's Companies Inc. has the largest domestic medical tourism program in the U.S. Speaking at the Business Health Agenda 2011 conference on March 10, 2011, in Washington, D.C., Bob Ihrie, senior vice president for employee rewards and services at Lowe's Companies, provide some insights into the program's success.
Lowe's Companies has 122,000 employees in its medical plan, and 205,000 total with dependents. "We spend $800 million on the medical plan per year, Ihrie noted. Most of the employees, about 67,000, are in the company's base plan with a $500 deductible and a $4,000 out-of-pocket limit.
"Our employees think a $500 deductible is a high-deductible health plan," Ihrie said. Given that the firm's average wage is $18 an hour, "for our workers, any expense isn't small when it's unexpected."
When looking at medical tourism options, the company came to one conclusion right away: "Many of our employees have never even been on a plane, so the likelihood they would travel to Singapore for surgery was just about zero. You have to offer something that is in people's range of experience," Ihrie advised.
"We looked at who could supply truly high quality at a reasonable cost" and settled on a single center of excellence model with the Cleveland Clinic, he explained.
How It Works
The result has been a fully coordinated program with a separate third-party administrator (TPA) who handles the arrangements. The TPA is based in Cleveland with a long history of working with the Cleveland Clinic.
"Our TPA does all the coordination, which includes coordinating with local medical service providers both before and after the surgery. The Cleveland Clinic doctors review the employees' medical records in advance. We don't send anybody to Cleveland until they've been approved and surgery deemed to be the correct procedure" (pending the actual pre-surgery examination by the clinic), Ihrie said.
"It's an optional benefit," he added. "Employees can elect to have surgery at their home hospital if they so wish. But if they choose to go to Cleveland, they're going to get the best care available in the U.S.—with no deductible and no out of pocket. We pay for the travel and, for a companion, hotel and living allowance in Cleveland. It's a powerful marketing message. Based on the result, it's clear we got through to our employees. They understood the proposition."
The benefit design is a powerful motivator, he pointed out, and "we continue to remind people all the time through postcards and online. We've been very clear in our messaging."
"We save money on every single operation, even after offering the incentives," Ihrie told the conference. It's not a lot; it's break even plus a little bit. But that's before you count any of the other benefits, including faster return to work and fewer readmissions. The economic benefits are there for us, but besides the economic benefits, I greatly underestimated the positive impact on our company and our employees," Ihrie said.
"This is the single biggest thing that has ever happened at Lowe's," he emphasized. "Every one of these employees has volunteered to be interviewed by the media when asked. Every one has told probably a thousand people. Almost every one has directly e-mailed the chairman. And almost every story is the same: They absolutely rave about what this is and how proud they are to work for a company that would offer this benefit to all of its employees. The rest of our employees tell us, 'I hope I never need this, but I can't believe that I work for a company that offers this kind of benefit.' I would encourage you not to underestimate that."
-- Stephen Miller, CEBS, is an online editor/manager for SHRM.
Domestic Medical Travel Is Taking Off for Surgery Deals, USA Today, July 2010
How Lowe’s and the Cleveland Clinic are Changing How and Where Healthcare is Delivered, Medical Tourism Magazine, May 2010
Medical Decision Support Can Save Surgery Dollars, SHRM Online Benefits Discipline, September 2010
The Case for Medical Travel, SHRM Online Benefits Discipline, April 2009
Medical Tourism Starting to Appear in Health Coverage, HR News, January 2008
Going the Distance for Health Savings, HR Magazine, March 2007
Related SHRM Video:
Medical Tourism, SHRM Multimedia, June 2008
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page