A recent report by Deloitte Center for Health Solutions on medical tourism points out that health care costs in the US are increasing at 8 per cent per year thus eating into corporate profits and household disposable income. It also says with a growing number of healthcare facilities in other countries now accredited by Joint Commission International (JCI), perceptions about quality have undergone a radical shift. According to Deloitte’s report, two in five respondents surveyed said they would be interested in pursuing treatment abroad if quality was comparable and the savings were 50 per cent or more.

In Nov -2008 Wellpoint, the largest health benefits company in the US, announced a new international medical tourism product aimed at helping recession-struck American corporates cut their healthcare costs. The significant thing about this product is that members can opt for elective (non urgent and done by patient’s choice) procedures at healthcare facilities in India. Serigraph Inc., a Wisconsin-based specialty printer will become the first company to participate in Wellpoint’s pilot programme that kicks off in January 2009. Its employees have the choice of being treated at two Apollo group Hospitals, in Bangalore and New Delhi.

Another significant event last month(Nov-2008) was a tie-up between South Carolina-based Companion Global Healthcare, a medical travel facilitator, with Wockhardt Hospitals in Bangalore and Mumbai. The tie-up is noteworthy, as Vishal Bali, CEO of Wockhardt Hospitals, explains. Those insured with BlueCross BluesShield (one of the largest health insurer in the US), who are tied up with Companion Global Healthcare, can now exercise an option of getting treated at Wockhardt Hospitals.

Suddenly a whole new untapped market has opened up for Indian hospitals seeking to attract patients from the US — that of insured patients. Till now, corporate hospitals in India were pegging the opportunity size of patients from the US at 45 million uninsured individuals, or underinsured individuals. But now given the recessionary climate, and moves by US corporates to cut costs by outsourcing treatment overseas, India expects to be a key beneficiary. Pradeep Thukral, head of international marketing at Apollo Hospital, now estimates the opportunity size to have enlarged to at least 65 million Americans.

Worker healthcare costs are enormous for US companies and in fact, have been cited as one of the biggest reasons why American automakers, which are seeking $34 billion from the federal government, are in such trouble. Take General Motors, which has 479,000 retirees, who get an average pension of over $40,000 a year — together these retirees health insurance costs work out to about $5 billion a year. Now add to that the healthcare costs of serving employees, and it spells big expense for firms like GM. Obviously, then companies in other sectors are quickly exploring alternative options to cut healthcare costs before they join the troubled league of the automakers.

Rajesh Rao, CEO, of IndUShealth, a North Carolina-based company that facilitates medical travel of American patients to Indian hospitals, estimates that a company with 1,000 employees typically can hope to cut its healthcare costs by half a million dollars every year by outsourcing treatment options for its employees to India. Rao should know because even before the Serigraph announcement made headlines across the US, he has been helping American corporates send employees to India. Today, Rao, has at least 12 mid-sized employers availing his corporate programme (translating into 40,000-50,000 subscribers) and he says he has been tripling his volumes year on year since he started in 2005, when it was just a trickle.

As Rao points out the burgeoning healthcare costs have forced companies in the US to look at alternative options. “Out-of-pocket expenses have shot up phenomenally,” he says.

Even if you include airfare costs of a patient plus a companion, and accommodation costs in India, the cost of getting treated in India is significantly lower. For instance, US News & World Report, in its 12 May 2008 issue lists the cost of a coronary artery bypass surgery in a US hospital as anywhere between $70,000-133,000 whereas in India this same procedure would cost $7,000. Obviously even if you include airfare, accommodation, still there will be huge savings.