Medical tourism craters during coronavirus pandemic, hospitals lose billions

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For decades, millions of Americans have travelled abroad to places like Thailand, Brazil, and Singapore for medical care. Medical tourism has been on the rise domestically, too, with employers in areas lacking access to top health-care professionals paying for their workers to seek help farther away from home.

But the coronavirus pandemic has hit medical tourism hard. In June, the number of weekly scheduled flights in the U.S. was down by as much as 65% when compared to the same time last year. The recent Covid-19 surges will not help.

As cases begin to rise again in Europe and U.S., governments are mandating curfews and lockdowns in order to curb infection rates. These lockdowns limit both international and domestic travel. According to AAA, 7 in 10 Americans aren’t sure they’ll be able to take a planned trip by year-end.

Pfizer’s announcement on Monday morning that its Covid-19 vaccine is effective at a rate of more than 90% sent the stock market soaring, and while just an initial step in bringing a vaccine to the public, an effective vaccine could help to restart the stalled medical tourism market. Airlines stocks were among those surging on the news.

Medical undergraduates during an anatomy class with Dr. Sreenivasulu Reddy Mogali, head of anatomy at the Lee Kong Chian School of Medicine at Nanyang Technology University in Singapore.

Courtesy of LKCMedicine at Nanyang Technological University, Singapore.

The American Journal of Medicine found that more than 1.4 million Americans sought health care in a different country in 2017. Globally, it estimated that 16 million people traveled to a different country to get care, spending an estimated $45 billion to $72 billion.

Americans who go abroad for care often lack health insurance or are seeking procedures not covered under their plans, most commonly for dentistry, cosmetic surgery, and in vitro fertility.

Domestic medical tourism, where patients seek care across states lines or outside of their local hospital system, has also seen a steep drop off.

David Vequist, who heads the Center for Medical Tourism Research at the University of the Incarnate World, the largest Catholic university in Texas, says that Covid-19 has crippled many hospitals’ finances by taking away domestic medical tourism, which is one of their largest sources of income.

Vequist said America’s flawed health-care system has forced hospitals to provide lucrative elective services to the privately insured in order to generate revenue, “Hospitals need to provide these elective surgeries because that’s the best way for them to turn a profit.”

Patients could receive similar care closer to home, but most choose to travel for the elective surgeries that must be performed by specialists.

The Mayo Clinic stopped all non-emergency medical care towards the end of March and began to lose millions. Elective surgeries had to make way for incoming Covid-19 patients. Last year, the Mayo Clinic generated 60% of its $12 billion annual patient revenue from privately insured patients, and only 3% from those on Medicaid. The hospital network now expects to lose $900 million in 2020.

A similar scene has played out throughout the country. In July, John Haupet, CEO of Grady Health in Atlanta, said that the pandemic had caused $115 million in losses, attributing $70 million to a reduction in the number of elective surgeries.

Walmart among employers sponsoring medical tourism

In some cases, domestic medical tourism patients are seeking care for critical health needs.

Prior to the pandemic, medial travel to centers of excellence covered by employers was on the rise. Centers of excellence are hospital systems like the Mayo Clinic, in Rochester, Minnesota, or Memorial Sloan-Kettering Cancer Center in New York City, where patients can receive specialized care or pursue elective surgeries.

Walmart has encouraged employees travel for certain high risk or high cost procedures at centers of excellence. According to the Walmart 2020 Associates Benefits Book, eligible candidates, if selected, would have their medical costs and all travel expenses covered for patients and caregiver. Covered employees were able to have procedures that included heart surgeries, transplants and hip replacements, as well as oncology care.  

Sam Walton’s original Bentonville variety store.

Gordon Huggins Jr. | Getty Images

The move away from localized care was made by Walmart after the retailer learned that associates were receiving a high level of misdiagnosis. As an example, 54% of Walmart associates who were told they need spinal surgery by a local doctor learned they could avoid surgery after visiting a center of excellence. 

The Northwest Arkansas Council — Walmart is headquartered in Bentonville, Arkansas — estimates that $950 million leaves the region as residents travel to hospitals and physicians in other locations.

Hospitals nationwide have reported seeing between 40% and 70% fewer patients since the onset of Covid-19. Most patients were scheduled for profit-generating services like radiological scans, and that combined with the downturn in medical tourism has contributed to a tough financial situation. According to the American Hospitals Association, hospitals are losing an estimated $50 billion a month.

Even in a world where a successful vaccine contains the Covid-19 crisis — Teladoc, which boomed during the crisis was down sharply on Monday morning — telehealth may offer a way to bring patients high-quality care closer to home, and before medical conditions worsen to the point where critical care is required. Prior to Covid-19, regulations often prevented doctors from practicing across state lines virtually. Research from the Brookings Institute indicates that if some regulations were removed, telehealth could be useful in protecting medically vulnerable populations. 

Last week at CNBC’s Technology Executive Council Summit, Darren Dworkin, the senior vice president of enterprise information services and CIO for Cedars-Sinai Medical Center, said there is an opportunity to expand health care to communities that have lacked access.

“We are seeing the biggest drop in screening and it’s hard to predict what will happen,” said Dworkin, referring to the fact that fewer patients are receiving preventative care. “The reality is we don’t have universal access to health care, and you are really starting to see the effects of this.”