Howard R. Underwood
Harvey J. Makadon

The growth of medical travel can mean not only lost revenue, but also potential liability for U.S. healthcare providers.

At a Glance

Outbound medical tourism presents several concerns for U.S. providers:

  • Potential lost revenue could reach almost $600 billion by 2017.  
  • Continuity of care can become an issue if complete medical records are not available to the patient's home physician and communications are not maintained between the domestic physician and the physician who rendered medical care abroad.  
  • Potential malpractice liability could place the U.S.-based provider at risk.  

In most industries, competition selects for innovation. The organization with a new idea that delivers a product or service more cost-effectively or increases sales wins. Innovation is a constant market force, in that new models, new approaches, and new entrants are common features rewarding winners and eliminating losers in the marketplace.

The healthcare industry is unlike other industries. It requires high fixed costs and intense investments in capital and labor-all of which result in a complex, complicated, expensive, and a pervasive fixture in the daily lives of most Americans. In fact, the delivery of health care is so complex that patients have historically ceded most decision making to their physicians.

Innovations that improve the value proposition (lower costs and better results) for healthcare consumers are timely: Costs are increasing, and consumers are shouldering more responsibility for cost controls. Any option that increases access to health care at a lower cost deserves consideration. Medical tourism is an emerging option.

Medical Tourism: The First Wave

Medical tourism isn't a new concept. People have traveled for generations in search of care. In current times, according to the Medical Tourism Association, medical tourism is considered "travel[ing] to another country to receive medical, dental, and surgical care while at the same time receiving equal to or greater care than they would have in their own country… because of affordability, better access to care, or a higher level of quality of care" ("Medical Tourism FAQs,"

In the 1990s, people used the term medical tourism to describe programs established by medical centers in the United States and elsewhere in the western hemisphere seeking to care for patients from the United States as well as from around the world. The sought-after care ranged from complex cardiac procedures (particularly valve replacement) and treatment for cancers of many different types to cosmetic surgery, which was often performed at a major academic teaching hospital or, in many instances, at a private center. Many of the patients, particularly those coming from abroad, paid undiscounted charges for their care, and although they constituted a small percentage of a hospital's admissions, they often accounted for a significant percentage of hospital revenue.

Medical tourism is now gaining attention due to the increasing costs of healthcare delivery in the United States as well as some difficulties in gaining access to care, although health reform should improve access for many who are currently uninsured unless the newly insured overwhelm the supply of providers. Many employer-sponsored efforts encourage employees to seek lower-cost, safe options outside the United States for elective surgical procedures. The uninsured and underinsured often opt to go without care or seek other less costly options. And the demand is growing. According to a recent study by the Deloitte Center for Health Solutions, 750,000 medical tourists went abroad in 2007, and that number could reach 1.6 million by 2012 (Medical Tourism: Update and Implications, 2008,

Although medical tourism sounds reasonable from a cost perspective, a significant issue is the early history of medical travel outside the country. Travel coordinators brokered transactions; clinical coordination was poor; it was unclear who should be sued in the event of medical malpractice; and the uncertainty of safety and effectiveness of care meant "buyer beware." Medical tourism resembled a typical emerging marketplace as products and services established themselves with consumers.

Medical Tourism Today: A New Industry

A number of factors are driving the growth in outbound medical tourism as defined from a western perspective today. The following factors are most often cited:

  • The increasing percentage of U.S. patients lacking any or private health insurance and the increasing enrollment in high-deductible health plans
  • Rapidly increasing U.S. healthcare costs
  • Willingness of self-insured employers to explore a variety of cost-saving options
  • Growth of healthcare consumerism
  • Substantially lower cost of health care outside of the United States
  • Increased confidence in the quality of care furnished by foreign providers, both facility and professional
  • Increased marketing by international providers via the Internet
  • Ability to obtain treatments or services that are unavailable in the United States due to a regulatory prohibition or lack of U.S. Food and Drug Administration approval
  • Ability to obtain organ transplants in countries where organs are immediately available
  • Development of medical tourism facilitators
  • Reduced cost and better ease of international travel

Yet far more important than cost or what services are offered are constraints that have kept this industry in check, including the lack of real comparative quality or outcomes data on the procedures.

In addition, medical tourism facilities promote their services directly to consumers through the Internet and apparently do not require a referral from a physician or suggest communication with patients' physicians at home either before or after procedures. Initiating the development of standards of care for medical tourists, the American Medical Association (AMA) in 2008 promulgated recommendations regarding medical travel to hospitals outside the United States. (See AMA Guidelines on Medical Care Outside the United States, p. 116.)

Other Concerns and Guidelines

Despite the availability of guidelines, professional societies have expressed concern about patients going abroad to receive medical care, particularly for unproven therapies. For example, the International Society for Stem Cell Research has developed guidelines for treatment abroad. Recognizing the need to provide access for those who are poor or come from developing countries, others still express concern.

In order to establish compliance with international standards of care, unceasing numbers of hospitals are seeking and have received certification by the Joint Commission International.

The industry is in its adolescence-not fully mature, but evolving in key areas that will secure its value proposition for consumers, employers, and health plans in the United States. Some core capabilities that are needed for "medical tourism 2.0" to succeed include:

  • Clinical coordination-overseeing patients from preoperative to postoperative care with a focus on outcomes management
  • Clinical differentiation-leveraging diagnostic, minimally invasive, and noninvasive surgical techniques with demonstrable safety and effectiveness results reporting and standards of quality
  • Marketing-ensuring increased awareness and use by insurance plans, large employers, and consumers, with the Internet and social networking playing key roles
  • Pricing-achieving 30 to 70 percent savings of cost of care abroad for payers compared with cost of care in the United States
  • Scalability-implementing sustainable business models that focus on high volumes, transactions, and strategic relationships with customers and providers
  • Investor support-increasing access to venture capital

Implications for U.S. Healthcare Providers

Uncertainty abounds in the medical tourism industry today. Experience suggests that several aspects of medical tourism likely will have a significant impact on U.S. healthcare providers.

The single greatest threat of outbound medical tourism for domestic U.S.-based providers is revenue loss and price competition. Self-insured employers have used the threat of outbound medical tourism as a bargaining chip with local providers to reduce their unit costs for service or for preferred intrabound provider networks. Furthermore, U.S. residents spent $2.1 billion to $2.4 billion overseas for medical care in 2008, and assuming 3 percent annual medical cost inflation, that amount could reach $30.3 billion to $79.5 billion in 2017, according to the Deloitte report Medical Tourism: Consumers in Search of Value. These figures, however, are dwarfed by the corresponding lost opportunity costs. U.S. providers could lose an estimated $15.9 billion to $17.9 billion in potential revenue in 2008 and $228.5 billion to $599.5 billion in potential revenue by 2017, according to the report. Even with the subsequent recession, which has slowed preference/price-sensitive care, the potential impact on the U.S. provider marketplace is breathtaking.

Assuming that international providers can offer documented empirical evidence of continuing quality improvements and results, it is reasonable to expect that some health plans will create carve-outs from their standard provider participation agreements. With these carve-outs, specified services could be provided exclusively at international centers of excellence as has been the case with select U.S.-based providers.

Unless providers are deeply involved with international care from the beginning of a patient's treatment, physicians whose patients obtain medical or surgical care abroad may experience practical barriers to continuity of care when their patients return home to the United States.

For example, it may be difficult for the tourist's physician to obtain complete medical records on the patient's surgical procedure and postoperative recovery abroad. Nonetheless, even with complete medical records from abroad, domestic U.S. physicians may be unfamiliar with the international provider's procedure or medical device used. Language obstacles and time zone differences may also hinder communications with the international providers and make it more difficult to resolve treatment questions or concerns. The likelihood and degree of such practical difficulties may vary greatly among international care providers and depending on whether the patient used an experienced and ethical medical tourism facilitator.

Potential malpractice liability for pretravel diagnostic preparation and postcare follow-up are additional worries for the medical tourist's home provider. As with any patient, an overlooked laboratory result or missed comorbidity could potentially result in malpractice liability for the U.S. provider. The supply chain of who should be held accountable for care becomes murkier as offshore providers become involved in a patient's care. U.S.-based providers should also be cognizant of potential payer coverage exclusions for pretravel and post-travel services (e.g., Medicare doesn't pay for services furnished outside the country). Accordingly, knowingly submitting a claim for payment for a service that was not completely performed within the country may place the provider at risk for violating the False Claims Act.

Facing the Challenges of Medical Tourism

Keeping in mind these implications, the increasing costs of health care, and the market's continual selection pressure for innovation, the medical tourism industry, if it matures, will likely pose threats to traditional stakeholders. The value gap in the U.S. healthcare system is too much of a challenge to be ignored, especially as individuals increasingly assume more direct responsibility for costs of their care.

Howard R. Underwood, MD, FSA, is a specialist leader, Health Plans practice, Deloitte Consulting, LLP, Washington, D.C. (

Harvey J. Makadon, MD, is specialist leader, Health Care Providers practice, Deloitte Consulting, LLP, Boston (

This article does not represent the professional advice of Deloitte LLP.

Sidebar: AMA Guidelines on Medical Care Outside the United States

The AMA advocates that employers, insurance companies, and other entities that facilitate or incentivize medical care outside the United States adhere to the following principles:

  • Medical care outside of the United States must be voluntary.
  • Financial incentives to travel outside the United States for medical care should not inappropriately limit the diagnostic and therapeutic alternatives that are offered to patients, or restrict treatment or referral options.
  • Patients should be referred for medical care only to institutions that have been accredited by recognized international accrediting bodies (e.g., the Joint Commission International or the International Society for Quality in Health Care).
  • Prior to travel, local follow-up care should be coordinated and financing should be arranged to ensure continuity of care when patients return from medical care outside the United States.
  • Coverage for travel outside the United States for medical care must include the costs of necessary follow-up care upon return to the United States.
  • Patients should be informed of their rights and legal recourse prior to agreeing to travel outside the United States for medical care.
  • Access to physician licensing and outcomes data, as well as facility accreditation and outcomes data, should be arranged for patients seeking medical care outside the United States.
  • The transfer of patient medical records to and from facilities outside the United States should be consistent with Health Insurance Portability and Accountability Act of 1996 guidelines.
  • Patients choosing to travel outside the United States for medical care should be provided with information about the potential risks of combining surgical procedures with long flights and vacation activities.

Source: American Medical Association Council on Medical Service, 2008.

Publication Date: Wednesday, September 01, 2010

Login Required

If you are an existing member, please log in below. Username and password are required.



Forgot User Name?
Forgot Password?

If you are not an HFMA member and would like to access portions of our content for 30 days, please fill out the following.

First Name:

Last Name:


   Become an HFMA member instead