Sicko, The US Health Care System

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The following excerpt from Metro Magazine in New Zealand is an important and balanced glimpse of the troubled and sick US Health care system.

Editor’s Note: My U.S. insurance premiums for my individual private policy with Anthem Blue Cross (New Hampshire) were US$ 500.00+ per month with a $2,500 yearly deductible. This deductible started over every year –  payments toward the deductable could not be carried over to the next year. I was under insured, and was throwing money away. I stopped this policy a few months ago.  In contrast,  monthly insurance premiums for a family of four in New Zealand are approximately $100.00/per month with little or no deductibles. A part of my plan will be a flight to a NZ hospital if need be.

I was compelled to put this on MSI’s blog. Please encourage others to read this as well and pass it on.

Metro Magazine, New Zealand, April 2009
By Metro Staff Writer Frances Morton

Health Care USA

Health Care USA

Even as parts of our health system struggle to cope with demand, entrepreneurs have launched a business flying Americans into Auckland for surgery. Bob Light lives in Cottonwood, Arizona, a small town (population 12,000) in the picturesque Verde River valley, 160km north of Phoenix. Cottonwood is *cowboy country, and the town was notorious for bootlegging in its heyday, attracting amusement-seekers from as far away as Los Angeles. These days, visitors are more likely to roll up for the **ghost towns and cactus-strewn desert scenery than wild times in the West. Light, 55, runs a landscaping business. His artificial hip needed replacing and was causing him so much trouble he could no longer work unless the job involved sitting down. His business is small,  and he doesn’t have health insurance. In the complex American health insurance market, Light couldn’t find insurance he could afford and that truly do something for him.

That left him with two choices: get an operation in the States paying full price, or look for a cheaper option abroad. Light consulted orthopedic hospitals in California and Arizona that quoted him between US$70,000 and US$120,000. He believes that with all extra costs factored in, he could have easily been up for a US$140,000 bill for a new hip.
That’s when a client told him about a company based in Auckland, that would arrange the surgery in New Zealand for a fraction of the cost,  in Light’s case about US$23,000. In the US, every 30 seconds someone files for bankruptcy as a result of medical costs. Light didn’t want to become part of this statistic. “If I didn’t do it now I wouldn’t be able to save my company,

“My home and my vehicles,” says Light on the phone from Cottonwood, where he is back home recuperating from the operation. “Everything was on the line. It still is right now, but I’ve got a lot more faith that, in a couple of months, I can start getting myself into the positive side financially” Just before Christmas last year, Light was the first person to travel to New Zealand for elective surgery as a client of  Medtral,

Dr. Ed Watson

Dr. Ed Watson

a company set up by Dr Edward Watson in late 2007, targeting North Americans and other foreigners seeking affordable surgery. The company acts as a broker, guiding patients through every step of the process, from determining their medical needs and booking travel, hotel accommodation and acquiring travel visas to post-operative care and rehabilitation.
Like more than 70 per cent of his fellow Americans, Light didn’t hold a passport. He had never traveled by plane before, and the idea of crossing an ocean was terrifying. Contributing to his anxiety was the fact that he had to do it alone. He couldn’t afford the extra cost of a plane ticket for his wife to accompany him.”Coming through Customs itself was all new and frightening for me,” says Light. “Then once I got through and saw my name on the little card for the taxi driver, from that point on, everything was like silk.”

It takes a good deal of persuading to convince unwell people to travel for treatment, but Watson is confident New Zealand has got a competitive advantage in the burgeoning medical travel market. “We have a First World medical system, we speak English, our surgeons are well trained and we have a nice place to recuperate,” says Watson, a wiry man with a shiny dome rimmed with coppery tufts who comes over all bouncy when talking about Medtral’s future.
“Globalization of health care is about to begin,” he proclaims.” It’s the last thing to go global, there’s no two ways about it. And I frankly believe in the next 10 years, you and I will decide on a surgeon based on what we think of that person, not where they are.”
This may be on the extreme side; however, both research and anecdotal evidence point to an increasingly international marketplace for health care.
According to a study by the Deloitte Center for Health Solutions, 750,000 Americans traveled overseas for health care in 2007, a figure Deloitte predicts will rise to an astonishing six million people next year. A similar study by McKinsey puts the current figure of medical travelers much lower but also predicts growth in the number of patients on the move for care, estimating the potential US market at between 500,000 to 700,000 people a year. It’s Medtral’s and Watson’s goal to lure “several hundred” of them to New Zealand.

They are up against competition from a growing number of countries. Costa Rica and Mexico are popular destinations for Medtral’s target market, especially America’s Spanish-speaking population. Southeast Asia is establishing itself as a hub for patients from all over the world/

A study by research specialists MarketResearch.com found 2.9 million patients visited Thailand, India, Singapore, Malaysia and the Philippines for medical tourism in 2007. The Asian medical tourism market is expected to grow by 17.6 per cent between 2007 and 2012.
The concept of traveling for health care was not novel to Bob Light, who knew of several compatriots who had done the same. He considered a number of countries before settling on New Zealand. As well as the cost, the fact that New Zealand is a politically stable country was an important factor when making his decision.
“I heard great things about India but India’s scary. They are bombing things down there and everybody hates Americans,” says Light.
The cost of his operation would have been less in an Indian hospital but Light was willing to pay a few thousand more for peace of mind. “I felt comfortable coming to New Zealand.”

Surgery=$$$ in the USA

Surgery=$$$ in the USA

We’ve all heard the stories of holidaymakers [vacationers] slipping off to Thailand or India and returning home with a tan and a sculpted snot or new boobs. Although some plastic surgery procedures are on Medtral’s operations list, Watson is quick to point out the company’s focus is on “medical travel”, not “medical tourism”. It offers a range of treatments considered serious elective surgery, including coronary bypass, hip and knee replacement, prostatectomy, hysterectomy and renal dialysis treatment. Medtral will organize package holidays through Air New Zealand if required but predicts most patients will want to have the operation, recuperate and head home as soon as they can.

This is exactly how Light felt after being fitted with a new hip, although he is hoping to return for a holiday in a couple of years, provided his financial worries ease and his health remains strong.” Next time I’m taking my wife over there and possibly my son and daughter-in-law,” he says. “It was such a wonderful experience it’s definitely worth going back for tourism proper.”

Watson is quick to point out the company’s focus is on “medical travel”, not “medical tourism”. It offers a range of treatments considered serious elective surgery, including coronary bypass, hip and knee replacement, prostatectomy, hysterectomy and renal dialysis treatment. Medtral will organize package holidays through Air New Zealand if required but predicts most patients will want to have the operation, recuperate and head home as soon as they can.

Watson got the idea for his company after observing the massive discrepancies
in cost between treatment in New Zealand and the US while working in the
biotechnology industry. A trained obstetrician and gynecologist, he spent eight years working for pharmaceutical companies Pharmacia, Schering-Plough and Pfizer. In his position, he was responsible for setting up clinical trials overseas.”I was always intrigued when I set up clinical trials in Australia, or New Zealand or the US — the difference in price was phenomenal for the same trial.”
The trials had to be identical, which meant they gave a direct cost comparison of medical services such as physicians, nurses and blood tests.

Health Insurance USA

Health Insurance USA

THE HUGE COST OF MEDICAL LIABILITY INSURANCE IN THE UNITED STATES – MORE THAN US$300,000 A YEAR PER SURGEON – IS ONE OF THE REASONS AMERICANS ARE CHARGED SO MUCH FOR THEIR OPERATIONS.

“The interesting part to me was the difference between the States and New Zealand was about five times [more expensive], for the same thing,” says Watson. “I thought, `Gee whizz, if that’s true it  must be true of medical procedures.”‘

The idea took root in 2006, when Watson returned to New Zealand from living in Sydney. He developed a business plan and took it straight to Dr Andrew Wong, CEO of MercyAscot, the company behind Mercy. “How does an American citizen or a Canadian citizen who needs a hip replacement find out about MercyAscot? They’ve got no idea. A lot of them will never have even heard of New Zealand let alone thought of coming down here for an operation, let alone see how to actually activate that process.

Wong says his reaction to that first meeting was, “How serendipitous.” MercyAscot has been treating foreign patients for years, mostly from the Pacific Islands, and Wong had already been researching the possibility of developing this service
“What we determined we needed was a broker.” By late 2007, Wong had become a director and share holder in Medtral, cementing the new company’s private hospital in Epsom and Ascot private hospital in Greenlane

Says Watson, “The more you do something, the better you become at it. If we can bring some of these patients across from America, put that volume in, it may mean that some programs we otherwise wouldn’t have started up, we can actually justify.”
He cites expanding the hospital’s surgical robot programs as one example. “Then what that can mean is that we can offer services to New Zealanders and Aucklanders that maybe we couldn’t before.”
New Zealanders concerned that a flood of foreigners will put more pressure on an already beleaguered health system struggling with long waiting lists and under staffing have unfounded fears, Like Light, most Medtral clients will either end up in the operating theatres of Mercy or Ascot hospitals.
Watson is also seeking deals with other private hospitals around the country, and in Australia, so that should a sudden influx of patients arrive, there will be somewhere to accommodate them according to Watson.
All procedures will be carried out in the private system with long lead times at least three months in many cases — so hospitals and surgeons have plenty of time to plan.

He estimates New Zealand’s private health-care system could treat about 2000 foreign patients a year before needing to build a health-care sector for elective medical procedures and so, as a result, We’re making, we’re not taking beds from New Zealanders. “We’re not ever going to use the public health-care sector,” says Watson.”We’re only using the private new private hospital.
Both Watson and Wong foresee benefits for Aucklanders if Medtral is successful at bringing extra patients into the country.  “All procedures need volume to ensure your equipment is well utilised,” says Wong. “But more importantly, your staff is continuously working on those procedures,”
Dr Garry Heynen, the orthopedic surgeon who operated on Light, says he found it an interesting case to do but adds he wouldn’t have time in his schedule if hundreds more patients began turning up for surgery.

Medtral’s three full-time staff — Watson, managing director Steve Nichols and operations manager Ainsley White occupy pokey offices tucked away in the old rabbit-warren building that is the Specialist Care Centre at Mercy Hospital.
It is a humble environment. Medtral, which is funded by half a dozen private investors, has put money where it can be seen, flashy brochures, fancy branding and a smart website to appeal to clients, and on airfares to the US for conferences and meetings to peddle-its message.

“It’s always been something that I’ve found quite amusing as far as Medtral is concerned,” says Heynen. “They’re predicting that if this system works there’ll be thousands of people tripping over from America, but we don’t have the capacity to be able to deal with them. There’s got to be more hospital beds and more surgeons.”
More surgeons are exactly what Watson is hoping for. According to a 2008 OECD report entitled Health Workforce and International Migration: Can New Zealand Compete?, New Zealand has the third-highest expatriation rate for doctors (28.5 per cent) and second-highest for nurses (23 per cent) in the OECD. Says Watson: “The reason they’re not coming back now is they’re slightly nervous about whether there is a job for them. Is there a population that can sustain their skills?”
Wong believes more patients will lead to more funding for the latest technology, which would attract New Zealand medical staff home.
“Some of our highly trained medical specialists may not come back to New Zealand unless they know they can do some of these medical procedures and use some of this equipment,” says Wong. “We actually hope — and we don’t know how many patients are going to come —that this will help us to attract and retain highly skilled medical and nursing staff.”
Heynen treated Light as he would any other patient. He charged the same amount as he would charge a New Zealand patient and insists Light received exactly the same standard of care as his usual patients.
Heynen’s key concern about being involved in the Medtral process was the potential medico-legal dramas. “The only thing that I wanted to protect myself from was the American system where patients are able to sue doctors personally in the event of complications and/or dissatisfaction,” he says.
A major factor in the cost of health care in the US is the huge premiums surgeons must pay for medical liability insurance — easily US$300,000 a year — to protect them from lottery-sized payouts should something go wrong. This issue was addressed by Watson who, after seeking legal advice, implemented a policy that all patients must sign a waiver acknowledging they are subject to New Zealand law and therefore unable to sue for malpractice back in the US. in their home country, they will need to rely on the health system there.
The one situation where a Medtral client would end up in the public sector here is if there was a surgical complication resulting in an emergency. Watson acknowledges in the risky domain of health care this is a possibility, and he has planned for it accordingly.
Patients are covered by Medtral’s contingency insurance. The benefits are twofold, says Watson. It is extra reassurance for people making the trip and a strong selling advantage as few other medical travel destinations offer such comprehensive and explicit insurance.
What’s more, the New Zealand taxpayer will not be left picking up the bill if things go belly-up. The 75 million uninsured and under-insured Americans, like Bob Light, are expected to keep business ticking. Steve Nichols of Medtral calls them the “flotsam and jetsam of the system”.

The company’s success will lie in whether it manages to sign deals with health insurance firms in the US. This is an avenue it is working hard to secure, aiming ultimately to work in a business-to-business model.
Health insurance is a complex, murky business in the US — the details of which are too complicated to explain here. In brief, even fully insured customers often get caught with enormous bills because of restrictions on coverage and hidden costs. Some people have policies where they must contribute a co-pay, a sort of excess that can cost thousands.

Heynen’s biggest worry for his patients is that he would not be able to go through his normal follow-up process. “If there was a patient who required major complex surgery, or had significant medical problems making the risk of the surgery far greater, then I would recommend “I just can’t see him if something goes wrong.”

If a patient’s condition does deteriorate when back in their home country, they will need to rely on the health system there. The one situation where a Medtral client would end up in the public sector here is if there was a surgical complication resulting in an emergency. Watson acknowledges in the risky domain of health care this is a possibility, and he has planned for it accordingly. Patients are covered by Medtral’s contingency insurance. The benefits are twofold, says Watson. It is extra reassurance for people making the trip and a strong selling advantage as few other medical travel destinations offer such comprehensive and explicit insurance.
What’s more, the New Zealand taxpayer will not be left picking up the bill if things go belly-up.

Hip replacement operations are particularly suited to this system, Heynen says, because patients are often in reasonably good health, as was the case with Light. Heynen has been keeping in touch with Light’s progress by monitoring x-rays sent over the internet. “I can still follow his hip from afar,” the surgeon says.

The one situation where a Medtral client would end up in the public sector here is if there was a surgical complication resulting in an emergency. Watson acknowledges in the risky domain of health care this is a possibility, and he has planned for it accordingly.

Medicare, which provides cover for those over 65, contributes only 80 per cent of the medical costs. Medtral is working with a 70-year-old priest who needs knee replacements and has been quoted US$200,000, leaving him with a US$40,000 shortfall. He can come to New Zealand and get the same operation for US$22,500.
Watson’s goal is to get health insurance firms to recognize these cost savings and offer their customers the option of travelling to New Zealand as part of their policies. Last year, Medtral began partnerships with Massachusetts-based Pinnacle Health and Global Medical Conexions, two preferred provider organizations (PPOs) that supply administrative services for self-insured companies — another sector of the health insurance industry. This means clients of the PPO will be given the option of a medical travel package to New Zealand for treatment.

Says Watson, “They’re attracted to companies like us. In this current global recession, one of the first things these companies are cutting is health benefits.
“The large [self-insured] companies have more pressure on them than the large insurers, so we’re starting to see them edge up. Large grocery chains that have 100,000 employees are starting to look at this. Some had done deals with hospitals in Costa Rica because a lot of their employees are Spanish speakers. “The wave is starting. They’re starting to talk about it in the States, whereas when I started they just looked at me like I was from another planet.”

The Medtral concept has piqued the interest of American media. The Washington Post and the Los Angeles Times have run articles on the company and CNN has mooted the idea of following a patient to New Zealand to track their experience.
Medtral is very much in its start-up stage and there’s not much to see in its basic offices in Epsom, but it is hoping once word-of-mouth spreads, many more clients will follow.  At latest count, Medtral had sent individually tailored quotations to 10 American patients and one Canadian patient, an important step in convincing them to come to New Zealand for surgery. Medtral has already made one convert. Bob Light says he has been recommending the company to everybody he knows and “anybody who will listen for five minutes on the street”.

“I think our health system sucks,” says Light, when asked about the way things work in his homeland.” It’s the worst. It’s way too much interested in the dollar and not enough interested in the healing. I got the absolute opposite impression when I was there in New Zealand. I felt they were more interested in the healing than the dollar.
“When they opened me up and found extra problems, it would cost an extra $15,000 to $20,000 here and they didn’t charge me another nickel [in Auckland]. They gave me a price and stuck to the price.
“You guys know how to treat people there.”

* A term used by the author. While Cottonwood is indeed in the western US, according to a relative of Mr. Light, the area is more diverse. I have lived in Sedona, and would agree.  However Cottonwood is indeed more “Cowboy” than Hanover, NH. An understandable perception coming from a Kiwi.

** The author is referring to nearby Jerome, AZ, not Cottonwood, which has been known as a Ghost Town in the ’60’s and ’70’s

Surgical Costs By Country

Surgical Costs By Country

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11 Responses to “Sicko, The US Health Care System”

  1. J Light Says:

    The innacuracies in this article are astounding. I am related to Mr. Light and I live in Cottonwood.
    His first name is Bob, not Francis Morton.
    From the article: “These days, visitors are more likely to roll up for the ghost towns and cactus-strewn desert scenery than wild times in the West.” is innacurate. We have no ghost towns, and please do not imply that we do, or that our scenery is purely “cactus-strewn”. If you had ever been here before, you would know that we have cottonwood trees, pine trees, and we even occassionally get snow.
    Also from the article: “Light, 55, runs a landscaping business and for three years his enterprise has been heading the wa3 bootleggers.”, Bob does run a landscaping business, but what the heck is “the wa3 bootleggers”? This is extremely innacurate.
    And lastly: “His artificial hip needed replacing and was causing him so much trouble he could no longer unless the job involved sitting down or propping I up on his tractor.”. Aside from the fragmented, unintelligible sentence- he does not own a tractor and does not “prop up” on a tractor.
    Please correct these innacuracies. Thank you.

    • mtnspirit Says:

      J Light,
      Thanks for your comments. This article was reprinted unedited from an Auckland, New Zealand newspaper. I’ll forward your comments on to them. I’ll also take the liberty to make corrections per your suggestions.
      Regards,
      R Richards

    • mtnspirit Says:

      After viewing the article the needed corrections jumped out at me, and have taken swift action. I couldn’t help but chuckle at the results of the OCR scanner’s result: “wa3 bootleggers.” Apologies. I agree, one usually doesn’t “prop up” on a tractor, and it would be especially difficult since Bob, not Francis Morton, doesn’t even own a tractor. Rest assured, we’ll work on cleaning up our fragmented, unintelligible sentences.

  2. mtnspirit Says:

    Does anyone know that the U.S. ranks 66 in citizen’s quality of health. France ranks second. While I respected the Health Care Summit, which I watched today, I’m still a bit skeptical because of the sheer numbers of unhealthy Americans and the level of greed which has infiltrated the system. On the other hand, maybe Americans and the C.E.O.s will rise to the occasion.

  3. Ross Says:

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  4. Ross Says:

    The content in this blog really is credible.When going for a comparison between the costs involved there are many other options to think about. INDIA is a country that has all the fine qualities to promote MEDICAL TOURISM with its seamless service
    and wider range of surgical options. INDICURE is a limited company in India offering customized health care services for medical tourism in coordination with support services of accommodation and transportation.

    URL: http://www.indicure.com/

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