Domestic medical travel could ratchet up pressure on local providers

If domestic medical travel takes off, your biggest competitor might be a hospital hundreds of miles away that offers better-quality and less expensive care. Healthcare dollars may be headed out of town, but not necessarily overseas, as some employers encourage workers to consider "domestic medical travel" to keep costs down, according to a report by Kaiser Health News.

Domestic medical travel could shake up the hospital industry by fostering truly national competition, consultant Jim Unland of the Health Capital Group in Chicago told KHN.

While no one seems to have quantified the magnitude of the domestic medical travel trend, there's a good chance it could become more popular because it could help drive employer costs down. By directing workers to facilities with high-quality care and lower prices, employers say they can reduce their costs from 20 percent to 40 percent--enough to cover travel expenses and then some.

In one example of domestic medical travel, home improvement retailer Lowe's (NYSE:LOW) has negotiated flat-rate fees with the Cleveland Clinic for complex cardiac procedures. The retailer has a three-year deal with the Cleveland Clinic to send willing employees and their dependents there for treatments such as open-heart surgeries, valve repairs and pacemakers. If patients have medical needs that are more complex than normal--perhaps a patient with multiple problems--Lowe's agreed to make addition payments.

One Lowe's employee who was hospitalized under the new program had three complex heart procedures. Lowe's paid $469,000 for procedures that would have cost $531,000 under the company's standard insurance plan, Bob Ihrie, senior vice president in charge of employee programs for the home-improvement store chain, told KHN.

Some experts argue that domestic travel may be slow to catch on because insurers are leery of offering travel incentives, which could anger the local provider community by sending patients elsewhere for care. Furthermore, workers may resist traveling great distances for medical care.

But Ihrie remained optimistic. If domestic medical travel catches on, particularly among large employers, it could help drive down costs and improve the quality of care, he said.

To learn more:
- read the Kaiser Health News report in USA Today