I have posted a number of articles about medical tourism whereby Americans travel abroad for (hopefully) high quality, low cost care. I have remarked more than once that a key aspect of medical tourism has been to provide an incentive for U.S. providers to operate more efficiently and in a more cost-competitive way. Healthcare reform in the form of, say, the ACA is also pushing hospitals in this same direction. It turns out that medical tourism is getting closer to home -- Narayana Health is opening a hospital in the Cayman Islands. The chairman of the company, Dr. Devi Shetty, has pioneered heart surgery in India for $1,600 a case (see: Why the future of health care can be found in the Cayman Islands). Below is an excerpt from the article:
...[M]ore than 2,000 attendees from around the world gathered under a large tent to celebrate the opening of a new 104-bed hospital [in the Cayman Islands] .Why all the fuss? Because this new facility is the work of Narayana Health chairman and India’s most renowned heart surgeon, Dr. Devi Shetty....Narayana is internationally regarded as a low-cost, high-quality health care provider. Its newest hospital, Health City Cayman Islands, is the organization’s first development outside of India. It has American health care providers watching closely and anxiously. Narayana Health positioned to deliver quality care to Americans. At the end of 2013, Narayana Health was operating 18 hospitals across 14 cities in India. With a laser focus on efficiency and quality, the average Narayana cardiac hospital performs 40 heart surgeries a day for less than $1,600 a case. That’s about 2 percent of the average heart surgery cost in the U.S. with outcomes that rival the best American facilities. With the first phase of the Cayman Island hospital completed in February, Dr. Shetty plans to expand Health City Cayman Islands to 2,000 beds over the next decade....In the United States, there is about 1 hospital bed per 333 people. The Grand Cayman Island has about 50,000 residents. When Dr. Shetty completes his expansion plans, his newest hospital will feature 1 bed per 25 Grand Cayman residents. It doesn’t take a heart surgeon to see Dr. Shetty is thinking way beyond the Caymans. Given the hospital’s close proximity to Miami, Dr. Shetty must be planning to attract patients from the United States. That would certainly explain the 5-star hotel he built next door with a foot bridge connecting the two world-class structures.Today, Health City Cayman Islands focuses on cardiac and total joint surgery. It will add cancer care and transplant services in the near future. Plans are already underway to construct an international medical school and a variety of high-quality residency training programs.
Self-insured companies are beginning to point their employees in the direction of "super-regional' hospitals for major surgical procedures such as hip replacement (see: Patients Encouraged to Travel for Surgical Procedures by Their Employers). Many such hospitals have become so experienced at performing such procedures that they can "wring out" inefficiencies and quote a lower, and fixed, price for them. In so doing, they "undercut" the smaller hospitals that may be located in the patient's home communities. The patients participating in such programs often enjoy a quality advantage based on their willingness to travel some distance and the company derives a cost benefit.
With the launching of Narayana Health in the Cayman islands, the low cost, high quality competition could get even stiffer for hospitals in the U.S. Traveling to the Cayman islands may not be as daunting as a trip to India or Singapore. Narayana, I am sure, will also package some sort of recuperation option with their surgical procedures at little additional cost for the insuring company because their base cost for the procedure will be so much lower than in American hospitals. The burden that Narayana will need to overcome in order to attract more U.S. patients will be to prove that its quality and standards are comparable to that of U.S. hospitals. My guess is that it will not be hard for the company to obtain such data quickly given their large anticipated patient volume. With such data in hand, they can then begin to market to the huge U.S. market to the north.
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