Health care has been essentially a service provided locally for centuries; a patient feels chest pains, takes a fall, or fractures a limb, and he/she immediately seeks medical assistance from the closest source. According to the case study introduction by Hill, Charles W. L. (2011), for that possible reason, it was long thought that “health care is one of the industries least vulnerable to dislocation from globalization” (p. 42).
However, one could draw conclusion, using Hill, Charles W. L. (2011), that several mitigating factors have enabled not only the globalization of marketable production-based goods, but also of service-related industries such as legal services and using medical diagnostics as well as surgical procedures; the case makes a compelling, if somewhat incomplete, case for globalization based upon factors such as cost reduction and improved quality of care; however, further research supports the case study’s findings.
Facilitating Developments
Factors such as a perceived shortage of qualified cardiologists to meet a rising demand for services is a possible explanation. Although, in the Time Magazine article by Brill, Steven (2013, March 4), he exposed the widespread practice of ordering medically unnecessary CT scans. Statistics show that the use of CT scans alone has more than quadrupled in recent decades, many times to ward off a possible malpractice lawsuit, but oftentimes to drive up profits.
The demand for more skilled physicians to interpret results may be genuine, yet it is exacerbated by profit-driven hospitals eager to pay for expensive equipment within a short time. As surmised by Hill, Charles W. L. (2011), making much-needed care more accessible and affordable certainly makes outsourcing to less costly, but equally skilled, physicians in Mexico, India, and Singapore more attractive.
Additionally, escalating costs of health care in the U.S. (driven mainly by hospital / pharmaceutical profits as our country’s sixth largest economy), and technological innovations, which would allow efficient use of “outsourcing,” both contribute to the globalization of health care. As stated by Hill, Charles W. L. (2011), the assigned case cites U.S. surgical costs in the hundreds of thousands for surgeries such as hip and bypass surgeries while those same surgeries, with travel expenses included, cost much less when outsourced.
Furthermore, technological advancements in the past several decades have greatly increased efficiencies with immense cost-saving and life-saving benefits. Per Hill, Charles W. L. (2011), a great argument can be made for outsourcing diagnostics to the other side of the world; while American doctors are asleep, Indian counterparts can be hard at work interpreting films or CTs, readying the results for swift treatment the next day.
One of the most important factors supporting globalization, however, is the pushback of insurance companies and uninsured / underinsured consumers in an effort to reign in costs and create a more competitive health care economy. In a Time Magazine article by Brill, Steven (2013, March 4, the investigative journalist and author published several startling facts:
Americans pay more per person for health care than Denmark, Australia, Japan, and Spain, yet our life expectancy is lower; we are number 50th in infant mortality, and 69% of American citizens who’ve experienced medically-related bankruptcy “were insured at the time of their filing,” meaning insurance failed to protect other valuable assets in a time of major illness or injury (p. 29). I surmised from Hill, Charles W. L. (2011) that it is no wonder that American employers, together with large insurance carriers such as Aetna, now encourage its health insurance customers to seek treatment abroad in order to reduce costs. Who Benefits? Who Loses?
Given the spiraling costs of U.S. healthcare, many entities seek to benefit. Americans currently insured or underinsured will be encouraged by insurance carriers to seek treatment abroad to reduce costs, thereby saving potential out-of-pocket expenses once an insurance cap has been reached, reducing medical bankruptcy.
American businesses may be able to take advantage of premium reductions offered by insurance companies should their employees agree to globalized care for major medical procedures or serious conditions which require single treatments or procedures; follow-up could be maintained in stateside facilities while the bulk of surgical procedure costs are reduced without sacrificing quality of care. Employees receiving better care will be a more productive asset to their employers.
U.S. employers, citizens, and insurance companies all stand something to gain, but it should also be noted that developing countries will also benefit; an increasing demand for their services will not only assist in honing their skills, but will also bolster their country’s economy, standard of living, and GDP. Other developing countries will also benefit as they will have more medical options as well as training centers to foster their own medical communities, thereby improving world health.
The largest potential losers are still the uninsured with no obvious means to pay for out-of-pocket procedures, in spite of deep discounts.
The case, Hill, Charles W. L. (2011), makes a vague reference to “recent legislation”, which one can assume refers to the “Affordable Care Act,” designed to bring coverage to millions more uninsured; however, affordability will still be an issue for privately insured/underinsured patients, according to Steven Brill, who exposed the “Chargemaster,” a driving force behind escalating healthcare costs in the U.S. It is an exhaustive list at each U.S. hospital, a listing of hospital services and corresponding charges, each charge bearing no relation to actual costs; every hospital sets the prices of its own Chargemaster; no hospital’s pricing schedule resembles that of another, nor do they seem to be based on anything objective, such as actual cost According to Brill, Steven (2013, March 4).
“hospitals, non-profit ones especially, have built in astronomic profits for basic procedures, laboratory tests, and have been caught padding bills which Medicare would never pay, but which are still submitted to insurance companies and private citizens after receiving treatment” (p. 22). As concluded by Brill, Steven (2013, March 4), because there is no current legislative oversight reducing what hospitals can charge those who aren’t on government-subsidized healthcare, hospitals do not participate in free-market, capitalized-based competition with one another, nor are they transparent about the basis for their charges. For these reasons, hospitals themselves stand to lose a great deal; they could see their profits erode as
more savvy insurance agencies, employers, and citizens seek out a global market which is competitive and fair.
Risks of Health Care Globalization
One obvious risk of globalization is to the U.S. health care market and the arrogance fostered by the lack of regulation. Once again, U.S. hospitals are not transparent about how charges are determined as they bear little relation to actual costs. For example, according to Brill, Steven (2013, March 4), excerpts were used from actual hospital invoices; free from price regulations, patients are routinely charged $18 each for diabetes test strips (consumers can purchase for 55 cents each), $24 for a niacin tablet (in drug stores for about a nickel a piece) and CT scans for $6,538 (Medicare would pay that same hospital $825 for three scans based on actual costs). As stated by Hill, Charles W. L. (2011):
Should U.S. hospitals be required to reign in domestic costs and succumb to regulation to remain competitive globally? Or do we hope that globalization alone levels the playing field? If they outsource services to India or Singapore for diagnostics, would U.S. hospitals or physicians ethically pass on those cost savings to patients or insurers? Or simply pad their profit margins? And although the text does assert studies which demonstrate quality care is already available in Mexico, India, and Singapore. (p. 42).
There are dangers inherent in rapidly expanding where U.S. insurers send patients; subpar facilities may be utilized in order to curb costs; regulation and oversight must be included to facilitate safe, responsible implementation of health care, both home and abroad.
Is Globalization Worthwhile?
For many reasons previously discussed, globalization of healthcare, with proper oversight and some crucial regulation, is a breakthrough. No longer would patients or insurance companies (only Medicare is immune) be forced to pay exorbitant “Chargemaster” rates for U.S. healthcare, which has already been proven to be lacking in many areas. No longer would patients view treatment options as limited by geography; the increasing hospital conglomerates in the U.S., which are systematically reducing competition, would have genuine global competition.
For the first time since Medicare’s inception, there’s a genuine opportunity to stem the tide of skyrocketing medical costs, increase care efficiency, and foster real competition for complacent domestic health care providers who’ve long viewed their services as geographical monopolies: for too long health care has been exclusive to an area, much like utilities such as water and power, but without any legislative oversight necessary to protect the American people from abusive costs. As asserted in the expansive article by, Brill, Steven (2013, March 4)., “if you are confused by the notion that those least able to pay are the ones singled out to pay the highest rates, welcome to the American medical marketplace” (p. 22). Globalized health care may be the cure for what ails us.
References
Brill, Steven (2013, March 4). Bitter Pill: How outrageous pricing and egregious profits are destroying our health care. Times, 181, 16-55.
Hill, Charles W. L. (2011). International Business (9th Edition). McGraw Hill Irwin.