domestic medical tourism

Domestic Medical Tourism in the United States: Pros and Cons

Yes, this is such a thing as Domestic Medical Tourism.

If you need to have an expensive surgery performed in the United States, it is crucial for you to compare prices both inside and outside of the United States.  Hospitals in Asia can offer Americans 50-90% savings on the cost of the surgery, which can be a game changer for someone who needs to have a heart bypass surgery for example, and does not have insurance.  Hospitals in the United States have a much more complex pricing structure, which has resulted in a massive price disprespency between hospitals in different states. Consequently, people have begun to take advantage of domestic medical tourism, which offers a price that falls between the cost of hospitals in Asia and the average cost found in their state.   Domestic medical tourism is a notable option to consider, though it is crucial to note that it is still not possible for the United States to be cost competitive with hospitals in Thailand and India. Domestic medical tourism is the best bet for surgeries under $20,000 or for people that feel reluctant about traveling abroad regardless of the cost.



Domestic Medical Tourism is Booming

One reason that domestic medical tourism makes sense is because healthcare costs vary substantially from state to state.  According to the Balance, a 21 year old living in Utah paid an average of $180/month in health insurance premiums, while a 21 year old would pay $426/month for the same coverage in Alaska.  Furthermore, the cost of surgeries varies from state to state by as much as 40% in some cases, which makes it worthwhile for people to travel to different states for a joint replacement surgery for example.  As long as the surgery is not time sensitive and the person is physically able to travel, it is worthwhile for them to take advantage of the cost savings available in other states. Businesses and insurance companies have taken note of this trend, which has resulted in a boom in domestic medical tourism.  Some medical tourism companies have also begun to increasingly focus on domestic medical tourism in recognition of this opportunity.



Domestic Medical Tourism vs. International Medical Tourism

In many cases, companies will often feel more comfortable sending one of their employees to another state several hours away instead of to another country that is over 10 hours away.  By accessing the services of hospitals in other states or even by utilizing the services of the Free Market Medical Association, people in the United States are able to save around 20-40% on the cost of a surgery.  These cost savings are considerable, but they are still much higher than the costs that can be found in hospitals in Asia, in countries such as India or Thailand for example.  Hospitals in the United States are also beginning to become transparent with their pricing, which now makes it possible to shop state by state and compare prices.

domestic medical tourism

Domestic medical tourism can still be valuable for companies and insurance companies to utilize.  One company in Las Vegas noted that it was able to save $70,000 on an annual basis by utilizing the services of a domestic medical tourism company.  These services are consequently very useful for companies and insurance companies, as the only requirement includes flying for 2-4 hours to a hospital in a different state.  The global medical tourism industry was valued at approximately $15.5 billion according to Zion Market Research, with Americans spending roughly $2.1 billion of this amount.  There is a chance that the domestic medical tourism market could capture some of this value moving forward, but it would be difficult for domestic medical tourism to disrupt medical tourism.  Some procedures can be performed at less than 10% of the cost abroad in places such as India or Thailand, which will always spur demand for American to utilize medical tourism. Hospitals in the United States have been under increased pressure to cut prices due to increased competition, yet prices will never be able to fall to the lows found in many hospitals in Asia.

Medical Tourism Appeals

Despite the emergence of low cost solutions found in some hospitals in the United States, 1.7 million Americans will still travel abroad for medical treatment this year, which shows that hospitals in the United States will ultimately not be able to compete on a cost basis for many procedures.

While some Americans may be able to save enough money on joint replacement surgery or other relatively minor surgeries to make medical tourism unnecessary, there are certain procedures where hospitals in the United States will never be able to compete on a cost basis.  One of the most asymmetric areas that we have noticed in the United States includes the heart bypass surgery, which hospitals in the United States charge between $70,000-200,000 to perform depending on the state. In comparison, hospitals in Asia can perform this surgery for between $6,000-15,000, which guarantees that people will be able to save over 80% on the cost of the surgery.  We also noted the superior quality of JCI hospitals in India, which displays that Americans can save over $60,000 on the cost of the surgery while receiving high quality services from hospitals in India.

Another related trend that may emerge in the United States includes certain states allowing the importing of various pharmaceutical products, which should also drive down the costs.  Certain states announced that they were beginning to consider importing drugs from other countries such as Canada, which would allow people in the United States to access drugs at 10-20% of the cost in some cases.  Given that these measures were just suggested this year, we still see considerable room for international medical tourism for Americans patients that would like to acquire drugs at less than 10% of the cost they would pay in the United States.  It is still worthwhile for an American patient that has hepatitis C to fly to India for treatment for several months if they do not have insurance.

Domestic medical tourism has resulted in prices in the United States moving towards the averages seen in developed Europe, and this trend should continue in the coming years.  However, hospitals in Asia still offer substantial savings compared to these discounted rates, which will support the continued flow of medical tourism to hospitals in Asia. Furthermore, global pharmaceutical prices in markets such as India and Canada are extremely competitive, to the point where even US generics are priced at an unhealthy premium.  We see the appeals of domestic medical tourism, and encourage Ameircans to take advantage of this opportunity when possible. However, global medical tourism will continue to fill in some of the gaps that hospitals in the United States fail to treat, which will result in millions of Americans continuing to fly abroad for medical treatment.