Case 6-1 GLOBAL MEDICAL COVERAGE
Blue Ridge Paper Products, Inc. (BRPP) in Canton, NC is a paper company making predominantly food and beverage packaging. It was the largest employer left in Western North Carolina in 2006, with 1,300 covered employees in the state and 800 elsewhere. Started as a Champion Paper plant in 1908, it was purchased by the employees and their union (a United Steelworkers local) in May 1999 with the assistance of a venture capital firm and operates with an Employee Stock Ownership Plan (ESOP). To purchase it, the employees agreed to a 15% wage cut and frozen wages and benefits for seven years. From the buyout through the end of 2005, the company lost $92 million and paid out $107 million in health care claims. It became profitable in 2006. Maintaining health benefits for members and retirees is a very high priority item with the employees and the union, although retiree medical benefits have been eliminated for salaried employees hired after March 1, 2005.
BRPP employees are "predominantly male, over 48, with decades of services and several health risk factors. They work 12-hour, rotating shifts, making it extremely difficult to manage health conditions or improve lifestyle" (Blackley, 2006). The ESOP has worked hard to reduce its self-insured health care costs. Health insurance claims for 2006 had been estimated at $36 million, but appeared likely to hold near $24 million, which is still 75% above the 2000 experience. A volunteer Benefits Task Force of union and nonunion employees worked to redesign a complex benefit system. After two years of 18% health care cost increases, the rate of growth dropped to 2% in 2003. It was 5% in 2004 and a negative 3% in 2005.
Programs initiated in 2001 included a plan offering free diabetic medications and supplies in return for compliance and a tobacco cessation plan with cash rewards. In 2004, the company opened a full-service pharmacy and medical center with a pharmacist, internist, and nurses. In 2005, it began a Population Health Management program. Covered employees and spouses who completed a health risk assessment were rewarded with $100 and assigned a "personal nurse coach." The nurse coach assists those who are ready to change to set individual health goals and choose from among one or more of 14 available health programs, which may include "cash rewards, waived or reduced co-pays on over 100 medications, free self-help medical aids/equipment, educational materials, etc."
Where BRPP could not seem to make headway was with the prices paid to local providers. Community physicians refused deeper discounts. Even banding together in a buying cooperative with other companies could not move the local tertiary hospital to match discounts offered to regionally dominant insurers. This hospital was not distressed and had above-average operating margins.
Articles on "medical tourism" in the press and on television attracted the attention of benefits management. Reports were of high quality care at 80% or less of U.S. prices with good outcomes. BRPP contacted a company offering services at hospitals in India, IndUShealth in Raleigh, NC, and began working on a plan to make its services available to BRPP employees.
IndUShealth provides a complete package to its U.S. and Canadian clients, including access to Indian superspecialty hospitals that are Joint Commission International accredited and to specialists and supporting physicians with U.S. or U.K. board certification. It arranges for postoperative care in India and for travel, lodging, and meals for the patient and an accompanying family member—all for a single package price. For example, it represents the Wockhardt hospitals in India, which are Joint Commission International accredited and affiliated with Harvard Medical International. Other Indian hospitals boast affiliations with the Johns Hopkins Medical Center and the Cleveland Clinics.
Mitral Valve Replacement
One of the first cases considered was a mitral valve replacement. IndUShealth and BRPP sought package quotes from a number of domestic medical centers and could get only one estimate. That quote, from the University of Iowa academic medical center, was in the $68,000 to $98,000 range. The quote from India was for $18,000 including travel, food, and lodging for the patient and one companion. Testifying before the U.S. Senate Special Committee on Aging, Mr. Rajesh Rao, IndUShealth CEO, (2006) cited the following costs.
On June 27, 2006, the U.S. Senate Special Committee on Aging held hearings entitled "The Globalization of Health Care: Can Medical Tourism Reduce Health Care Costs?" Both BRPP and IndUShealth presented together with others.
When testifying to the Senate subcommittee, Bonnie Grissom Blackley, benefits director for BRPP, concluded:
• Should I need a surgical procedure, provide me and my spouse with an all expense-paid trip to a Joint Commission International-approved hospital, that compares to a 5-star hotel, a surgeon educated and credentialed in the U.S., no hospital staph infections, a registered nurse around the clock, no one pushing me out of the hospital after 2 or 3 days, a several-day recovery period at a beach resort, email access, cell phone, great food, touring, etc., etc. for 25% of the savings up to $10,000 and I won't be able to get out my passport fast enough.
BLUE RIDGE PAPER PRODUCT'S TEST CASE
The test case under the new arrangement was a volunteer, Carl Garrett, a 60-year-old BRPP paper-making technician who needed a gall bladder removal and a shoulder repair. He reportedly was looking forward to the trip in September 2006, accompanied by his fiancée. A 40-year employee approaching retirement, he would be the first company-sponsored U.S. worker to receive health care in India. The two operations would have cost $100,000 in the United States but only $20,000 in India. The arrangement was that the company would pay for the entire thing, waive the 20% co-payment, give Garrett about a $10,000 incentive, and still save $50,000.
The United Steel Workers Union national office objected strongly to the whole idea, however, and threatened to file for an injunction. The local district representative commented, "We made it clear that if healthcare was going to be resolved, it would be resolved by modifying the system in the U.S., not by offshoring or exporting our own people." USW President Leo Gerard said, "No U.S. citizen should be exposed to the risk involved in travel internationally for health care services" and sent a letter to members of Congress that included the following (Parks 2006):
• Our members, along with thousands of unrepresented workers, are now being confronted with proposals to literally export themselves to have certain "expensive" medical procedures provided in India.
• With companies now proposing to send their own American employees abroad for less expensive health care services, there can be no doubt that the U.S. health care system is in immediate need of massive reform
• The right to safe, secure, and dependable health care in one's own country should not be surrendered for any reason, certainly not to fatten the profit margins of corporate investors.
• The union also cited the lack of comparable malpractice coverage in other countries. The company agreed to find a domestic source of care for Mr. Garrett, but may continue the experiment with its salaried, nonunion employees. Carl Garrett responded unhappily, "The company dropped the ball .... people have given me so much encouragement," he said, "so much positive response, and they're devastated. A lot of people were waiting for me to report back on how it went and perhaps go themselves. This leaves them in limbo too" (Jonsson, 2006, p. 2).
• How might state and national governments respond to this expanding phenomenon?
How State and National Government May Respond To the Expanding Phenomenon of Medical Tourism:
Medical tourism has been an increasing phenomenon over the past decade with is fast growing into a multi billion industry. The main U.S. medical tourists are often the one who are underinsured or uninsured seeking low cost high quality medical care in less developed countries. Increasingly companies are taking their employees outside the country in order to cut back on healthcare costs by more than 50%, though most are facing objections to this act. The United Steel Workers Union in this case study in specific points out that the problem with the healthcare system in the US can be resolved not by encouraging medical tourism but by modifying the US healthcare system to ensure that US citizens are not only able to get access to safe, secure, dependable and affordable healthcare in the US but also reduce the risk that U.S. citizens are exposed to when they travel internationally for healthcare services. They pointed that indeed the U.S. healthcare is in need of massive reforms to care for its people.
In view of this thought and perspective, the state and national governments can respond in a number of ways. They can either develop interventions that limit medical tourism and make local healthcare affordable to the uninsured and the underinsured, or they can develop interventions ...
Medical tourism national governments are examined. How might state and national governments respond to this expanding phenomenon is examined.