In the U.S., open heart surgery can cost between $20,000 and $100,000. If a doctor offered you the same quality of treatment for less than half that price, would you take the deal?
Here’s the catch: you have to fly to the Cayman Islands.
As health-care costs rise in the U.S., between 60,000 and 85,000 Americans go abroad every year looking for high-quality inpatient treatment that is both fast and cheap. And why wouldn’t these “medical tourists” choose a hospital on a sunny Caribbean island just an hour’s flight from Miami?
At least that is the thinking behind Health City Cayman Islands, a 140-bed hospital slated to open on Grand Cayman in February of 2014. The project, which began construction last week, will specialize in cardiology, cardiac surgery and orthopedics. It hopes to offer those services at 30 to 40 percent of the going market rate in the U.S., according to Manu Ramachandar, Health City’s Business Development Manager.
Traveling to a foreign country for critical surgery might seem risky, but it’s a cheaper alternative for many people who are self-insured or don’t have an insurance plan at all. And Ramachandar argues the treatment at Health City will be world class: the Cayman Islands facility is a joint venture between Narayana Hrudayalaya (Sanskrit for “God’s compassionate home”), a widely praised chain of 14 hospitals in India, and Ascension Health Alliance, the largest Catholic health-care provider in the U.S.
Tarun Khanna, a professor at Harvard Business School who has studied Narayana’s model, says the Indian group has a “deep expertise” in cardiac surgery, particularly for children.
“In my experience, their equipment and facilities are, for the most part, state of the art,” Khanna explains, “and the cost is phenomenally low. One of the motivating factors behind that is to make [quality care] available to the poorest of the poor.”
The Wall Street Journal has called Dr. Devi Shetty, Narayana’s founder, the “Henry Ford of Heart Surgery.” By treating so many patients and asking its doctors to standardize their procedures and specialize in their strongest areas, Narayana’s surgeons are able to perform more surgeries than other hospitals in India and the U.S., while maintaining a success rate comparable to the American average. (Latitude News has written before about the benefits of “frugal innovation” in developing economies.)
In 2008, surgeons at Narayana’s flagship heart hospital performed more than twice as many cardiac surgeries as leaders in the U.S. market. Despite that, Narayana reported a 1.4 percent mortality rate 30 days after bypass surgery, a common procedure, compared to 1.9 percent in American hospitals.
Over the next 12 years, Health City Cayman Islands plans to expand to 2,000 beds at a cost of approximately $2 billion dollars.
If you build it, who will come?
Thoralf Sundt is chief of cardiac surgery at the Massachusetts General Hospital in Boston. He says the quality of Shetty’s work and that of his surgeons is “excellent.” But he worries about the possibility of complications developing. “It’s not so much a matter of whether you can put the stitches in the right place – although surgeons like to think that. It’s also about the ancillary team. How good is the nephrology service? The pulmonology service? The immunologists? The hematologists? I just don’t know.”
“I would obviously rather stick close to home if I needed [cardiac surgery],” Sundt continues. “In the grand scheme of things it’s worth what it costs to get it done at home.”
And yet some Americans are already going to India and having a positive experience.
Last May, Latitude News wrote about Brian Navalinsky, an architect from Georgia who traveled 9,000 miles for heart surgery at a Narayana hospital in Bangalore, India. “Everything was so open and transparent compared to being a patient in the U.S.,” Navalinsky told our reporter Jennie Walmsley. “As a patient you were considered part of the team, unlike in the U.S. where concerns about litigation and risk block the system. In India they’ve got a different philosophy towards health and the patient.”
But Ramachandar says Health City doesn’t plan to target so-called “retail,” or individual, patients like Navalinsky, at least not initially. Rather the plan is to pitch the facility’s services to insurers and employers in the U.S. who could negotiate large-scale deals to send their patients and workers to the Cayman Islands.
Sharon Kleefield, a faculty member at Harvard Medical School who works on quality management, says the insurance market has so far been “very slow” to support medical tourism, mainly because of concerns over the quality of care in foreign countries. She notes that some insurers are showing an interest in “domestic” medical tourism, for example sending a patient from Los Angeles to a cheaper hospital in, say, Iowa.
But Kleefield adds that Health City might prove attractive to insurers and patients because of its close proximity to the U.S. If the hospital can achieve a “baseline of quality” grounded in data and gain international accreditation, she believes “it has the possibility of becoming a center of excellence, given the history of Devi Shetty in India.”
Ramachandar says Healthy City hopes to treat as many as 18,000 patients — including outpatients — each year, though the hospital hasn’t yet finalized any deals with insurers or employers. Negotiations are “ongoing,” he explains.
The attraction of the Caribbean
Beside India (and perhaps one day the Cayman Islands), other popular destinations for medical tourism include Israel, South Korea, Japan and Costa Rica. One of the most visited is Mexico, which has established a special border crossing for medical tourists. Our southern neighbor is particularly attractive for Americans without insurance, who generally make up the bulk of medical tourists.
President Obama’s Affordable Care Act might threaten the appeal of medical tourism by giving insurance to most Americans. But Ramachandar says he believes the new legislation will “take a limited pool of resources and spend it across a larger number of people,” leaving facilities like Health City to pick up the slack.
So why did Health City choose the Caymans, better known in the U.S. for scuba diving and offshore bank accounts? Ramachandar explains that the island’s government made concessions to the hospital like tax breaks, lower insurance premiums and accrediting Indian medical licenses in the Caymans. This special treatment did not go down well with everyone in the Caymans, especially given a degree of anti-Indian prejudice on the island.
But former premier McKeeva Bush, who resigned after being arrested but not charged during a corruption probe in December, argued that medical tourism will offer “another leg” to the local economy. “I’m glad Dr. Shetty did not bow out while he was being criticised,” Bush said.
To profit or not to profit?
While Narayana wants Health City to attract American patients, its U.S. partner, Ascension Health Alliance, a non-profit, seems to have other priorities.
“We’re not considering this a medical tourism facility. That’s not the intent at all,” Anthony Tersigni, Ascension’s CEO, told the St. Louis Post-Dispatch last April. “I’m not sure we’re going to have U.S. patients at the Caymans . . . We’re going to continue to take care of poor people in this country, and to try to take care of poor people in the Caribbean and South America.”
But Post-Dispatch reporter Jim Doyle quoted one expert as being skeptical about the facility’s potential for charity work.
Associate Professor Leigh Turner, a health care expert at the University of Minnesota, describes the joint venture as “an odd partnership.” The Cayman Islands – which enjoys a standard of living ranked 14th among world nations – seems a strange place to launch a health mission aimed at social justice and health-care access, Turner said.
“That seems like a place where you build a private, for-profit health center,” Turner said.
Ramachandar maintains Health City can do both — for instance by treating wealthier medical tourists who can subsidize poorer patients from around the region. Brian Navalinsky, for example, paid a higher-than-average fee for his procedure in India.
“Narayana Hrudayalaya and Ascension share the same philosophy of caring for people across society, particularly for the poor and the elderly,” Ramachandar says. “We are committed to providing them the best quality care at the most affordable price.”
In a statement to Latitude News, Ascension explained that while they and Narayana “approach the partnership with different primary goals, both of us are committed to expanding health-care access in the Caribbean.”Ascension also expressed interest in bringing the Narayana model to the U.S. after its test run in the Cayman Islands.
Harvard Business School’s Khanna thinks that could be a good idea.
“Given the state of disarray the American health-care system is in, we ought to try any sensible alternative,” he says. “There are certainly barriers to bringing that kind of economy of scale to the U.S. market, but even if they can…halve the cost, I think it’s worth trying.”