I was happy to see that Global HealthNet CEO Sandip Madan, a contributor to my MedTripInfo website, is now publishing in the Wall Street Journal as well. (See We Need Free Trade in Health Care). Along with Columbia University professor Jagdish Bhagwati, he presents the case for increased trade in health care services as an antidote to what ails the US system. I agree with about half of what’s printed there.
The authors use the World Trade Organization’s framework to segment health care trade into four modes:
- Mode 1: Arm’s length services that can be performed at a distance, e.g., claims processing and telemedicine
- Mode 2: US patients traveling abroad, i.e., medical tourism
- Mode 3: Creating and staffing medical facilities in other countries
- Mode 4: Medical personnel moving to where patients are
The authors argue that about half of Mode 1 savings are already being realized as claims processing and customer service have shifted abroad. They’d also like to see much more international telemedicine, and I agree with them there. The concept, which I call “virtual medical tourism” is a good one. In particular it’s worthwhile to support primary care physicians in chronic care management and for second opinions. Eventually payers will realize that consultations by foreign physicians will reduce costs, since physicians from abroad are likely to recommend the less aggressive and less costly interventions they provide at home.
Mode 2 has been discussed at length on the Health Business Blog and on MedTripInfo. It has merit, but the direct impact isn’t likely to be huge anytime soon.
Mode 3 is an interesting concept. The authors think we may see foreign-owned medical facilities open in the US, to compete with US-owned facilities on price. I don’t think that’s likely because there are too many barriers to entry and costs won’t end up being any lower. I do foresee the development of US or foreign-owned clinics that ally with overseas facilities for telemedicine and medical tourism.
Madan and Bhagwati are most enthusiastic about Mode 4:
Mode 4 concerns doctors and other medical providers going where the patients are. It offers substantial cost savings, since the earnings of foreign doctors are typically lower than those of comparable suppliers in the U.S.
But the importation of doctors is even more critical in meeting supply needs than in providing lower costs. According to the 2005 Census, the U.S. had an estimated availability of 2.4 doctors per 1,000 population (the number was 3.3 in leading developed countries tracked by the OECD).
Comprehensive coverage of the over 45 million uninsured today will require that they can access doctors and related medical personnel. An IOU that cannot be cashed in is worthless.
Massachusetts ran into this problem: Few doctors wanted (or were able, given widespread shortages in many specialties) to treat many of the patients qualifying under the program. The solution lies in allowing imports of medical personnel tied into tending to the newly insured.
There is a certain logic and attraction to this argument but I don’t completely buy it. I’m definitely in favor of free immigration of physicians (see Biting the hand that feeds you, sutures you, fills your prescription.. ) but it won’t lower costs overall. A larger supply of physicians is likely to drive more demand, making costs higher. We may have fewer doctors than some OECD countries, but we have a lot more than Singapore, where the figure is only 1.4 physicians per thousand people and there is universal access to care. Our problem here is two-fold: too much demand for health care services and reimbursement for specialty care (especially procedures) that is too high relative to primary care. If we work on those issues, through education, consumer directed health care and adjustments to reimbursement then we won’t need to boost the number of physicians.
In the meantime, primary care physicians are becoming the new lettuce pickers. (See The primary care bottleneck to health care reform.) Where’s the 21st century Cesar Chavez when we need him?