Outsourcing Health Care to India

Wall Street Journal, Monday December 15th 2008 by Uday Khandeparkar

There's nothing like an economic crisis to spur companies to take uncommon steps -- such as incentivizing employees to travel halfway around the world to get medical treatment.

It's outsourcing of a different kind, but the aim is familiar: to save money.
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Indian hospital groups are betting the economic crisis will transform the medical tourism industry from one tailored to individual patients, to one that targets corporate America's soaring health-care costs.

If this sounds far-fetched, recall that Indian back-office services were resisted until about a decade ago.

Next month, Apollo Hospitals , India's biggest health-care company, will for the first time treat employees of a non-Indian company, Wisconsin-based Serigraph Inc., for certain elective procedures.

The costs will be picked up by Serigraph's insurer, Anthem Blue Cross and Blue Shield. Employees will receive travel and concierge help, including free plane tickets for patient and companion, plus post-operative care upon return to the U.S. There will be no co-payments.

It's a trial program, but the economic benefits aren't in doubt: A cardiac bypass can cost about $100,000 in a U.S. private hospital. Apollo says it can do the procedure -- and accommodate a companion -- for a tenth of the cost.

On a purely financial basis, it's enormously appealing. The U.S., don't forget, is where soaring employee health-care costs have helped drive the auto industry into the ground.

"They desperately need to cut costs. And what's true for auto makers is true for corporate America," says Vishal Bali, chief executive of Wockhardt Hospitals , one of Apollo's India-based rivals.

About 150,000 foreigners sought elective medical treatment in India last year. The numbers have been rising by 15% a year as people reckon India's just fine for joint replacements and root canals.

To embed themselves in Corporate America, Indian health-care companies have to prove their physicians are competent, tools and techniques cutting-edge and blood supplies safe.

There's plenty of competition: Singapore , Thailand and Costa Rica , to name a few.

India's information technology services providers faced initial resistance when customers of U.S. companies were taken aback to find themselves speaking with India-based telephone operators with heavily-accented English.

As for the fundamental pillar of medical tourism -- cost -- the argument is getting stronger: Each U.S. dollar today fetches 25% more rupees than it did a year ago.

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