Medical Tourism and Corruption

Elizabeth Rosenthal, who is writing a series of articles for the Times examining why the U.S. leads the world in health care expenditures, reported a story about medical tourism for her third piece, which begins with 67-year-old Michael Shopenn discovering he needed a hip replacement and learning that it would cost him more than $65,000 in the U.S. because his health insurance determined his degenerative disease was a pre-existing condition and would not cover the surgery. Shopenn looked at places outside the U.S. for a more affordable solution and eventually found himself at a hospital outside of Brussels, which charged him $13,660 for his hip joint replacement. One of the reasons for the higher price tag in the U.S. was due to transparency:

In addition, device makers typically require doctors’ groups and hospitals to sign nondisclosure agreements about prices, which means institutions do not know what their competitors are paying. This secrecy erodes bargaining power and has allowed a small industry of profit-taking middlemen to flourish: joint implant purchasing consultants, implant billing companies, joint brokers. There are as many as 13 layers of vendors between the physician and the patient for a hip replacement, according to Kate Willhite, a former executive director of the Manitowoc Surgery Center in Wisconsin.

Health blogger Brett Keller describes this as a kind of corruption, or “rent-seeking on an institutional level.” He writes:

If this system existed in another country we wouldn’t hesitate to call it corrupt, and to note that it actively hurts consumers. It should be broken up by legislation for the public good, but instead it’s protected by legislators who are lobbied by the industry and by doctors who receive kickbacks, implicit and explicit.

[Thanks to Jon for the pointer.]

Photo: Hey Paul Studios

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