Medical Migration
by John Goodman
Issue 134 - June 24, 2009
 I have glimpsed at the future of U.S. health care and I am pleasantly
surprised. Instead of continuing to rise at twice the rate of growth of
income, health care spending will slow dramatically. Future prices will
actually be lower than they are today. Providers will bundle their
services into easily-understood packages with a single fee. They will
compete against each other on price and quality and the data will be
transparent. Health care will be provided in a free, competitive
marketplace. Third-party insurance will be relied upon only for rare,
very expensive events. Medical malpractice suits will be virtually
unknown.
There is only one catch. All this will happen outside the United States.
The National Center for Policy Analysis has written a good bit about
medical tourism, the U.S. hospital reaction to medical tourism, and
those shopping for health care. Still, I had no idea how easy it would
be to solve the vast majority of our health policy problems by simply
crossing the border. That is, I had no idea until a recent trip to
Guatemala City, where Thomas Saving, Andrew Rettenmaier, Grace-Marie
Turner and I toured a facility run by Grupo Hospitalario, a private
hospital chain.
The CEO of the facility is Erick Herrera, a Cornell University MBA. Most
of the doctors who practice there are U.S. trained, and most are board
certified. They have all the latest equipment; and as far as I could
tell they can do just about anything an American hospital can do. Right
now, only 10% of their patients are foreign and only 2 or 3% are
American. But as the U.S. health care system becomes increasingly
dysfunctional, a low-cost, high-quality alternative only a few hours
away could emerge in a heartbeat.
For starters, the hospital we visited looks like a modern hotel - with
all the comfort and amenities. And the price is right - better, in fact,
than a hotel. A private room is $55 a day. A suite is $85. And it comes
with a TV, minibar, Internet hookup and 24-hour room service.
Almost all medical services cost a fraction of what they would in the
United States. Whereas U.S. MRI scans range, say, from $500 to $1,500,
the Guatemalan equivalent costs $240 (daytime) or $100 (evening). (Yes,
they peak load price.) Gastric bypass surgery, a popular procedure for
American patients, costs $8,000 in Guatemala, compared to $25,000 in the
U.S.
Everywhere we looked we saw obvious opportunities to compete for the
American market. For example, wealthy people from all over the United
States routinely fly to ritzy spas and medical centers for super duper,
comprehensive checkups. The fee ranges from $2,500 to $5,000, depending
on the services selected. If they flew to Guatemala City instead, they
could have most of the same services for $120 to $270.
Medical tourism could become the most important export product of
Guatemala and other Latin American countries in short order. But would
their political systems allow it?
Latin American countries typically have a system of free health care
available to everyone. But the public systems are short on resources and
ration by waiting. So, almost everyone who can turns to the private
sector for their care. Unlike Britain and Canada, it is not viewed as
scandalous when Latin American politicians get their health care
privately. Indeed, private care for everyone who can afford it is normal
and accepted. The result is booming private sector medicine throughout
Central and South America and a potential export industry for patients
all over the world.
Bottom line: I have no confidence our federal government will solve our
health care problems. I have a lot of confidence that Latin American
entrepreneurs can do so.
John Goodman is President and CEO, Kellye Wright Fellow at the National
Center for Policy Analysis
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