Costa Rica Medical Tourism

Medical Tourism: Comparable to How Competition Changed the U.S. Auto Industry


Mark J. Perry - February 6th, 2009

From The Heartland Institute’s report “International Medical Tourism Is on the Rise“:

“More people are engaging in medical tourism because of rising health care prices in the United States, said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. ‘As more and more people have out-of-pocket responsibility, they’re looking around for the best deal, and out-of-country services in countries like Costa Rica are an incredibly good deal if you’re willing to travel,’ Scandlen said.

The rise in medical tourism is cause for alarm among some domestic health care providers, and it will end up forcing them to improve their services. ‘I’d compare this to the introduction of Volkswagens and Toyotas, what that did to American automotive manufacturers,’ Scandlen said. ‘It’s showing another way of doing business that the automakers in the United States were just too indifferent to adopt, so competition had to come from somewhere. It came from overseas.’

‘The American hospital model simply isn’t working well anymore, so patients will find someplace else,’ Scandlen continued. ‘Competition will assert itself, like it or not. If American hospitals don’t relearn how to run their businesses based on some of the ideas that are coming from overseas in places like Costa Rica, they will go the way of the automakers.’

American health care providers are especially concerned because much of their most-lucrative business is going overseas. The amount of profitability being exported far exceeds the number of people going abroad.

John R. Graham, director of health care policy at the Pacific Research Institute, agreed. ‘Medical tourism is a great opportunity to reduce U.S. health spending and allow more Americans to get high-quality care abroad,’ he noted.

U.S. hospitals have very high cost structures,’ said Graham, ‘largely caused by government regulation that inhibits competition and specialization, requiring general hospitals to be all things to all people. In the long run, as their “‘profitable” operations disappear overseas, American hospitals will face a crisis that will require policymakers to rethink how they organize the health care safety net.’

‘Quality and patient protections vary widely in other countries, just like they do within the United States,’ said Michael Cannon, a senior fellow at the Cato Institute. ‘What we don’t get in the United States is price competition, but that can’t last forever, particularly with foreign providers offering comparable quality at a lower cost.’

‘Medical tourism can only grow to places like Costa Rica,’ Cannon added. ‘And that’s a good thing.’”