    [Senate Hearing 109-659]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 109-659

                       THE GLOBALIZATION OF HEALTH CARE:
                 CAN MEDICAL TOURISM REDUCE HEALTH CARE COSTS?

    =======================================================================

                                    HEARING

                                   before the

                           SPECIAL COMMITTEE ON AGING
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                                 JUNE 27, 2006

                                   __________

                               Serial No. 109-26

             Printed for the use of the Special Committee on Aging

                        U.S. GOVERNMENT PRINTING OFFICE
                               WASHINGTON : 2006
    30-618 PDF

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                           SPECIAL COMMITTEE ON AGING

                         GORDON SMITH, Oregon, Chairman
    RICHARD SHELBY, Alabama              HERB KOHL, Wisconsin
    SUSAN COLLINS, Maine                 JAMES M. JEFFORDS, Vermont
    JAMES M. TALENT, Missouri            RON WYDEN, Oregon
    ELIZABETH DOLE, North Carolina       BLANCHE L. LINCOLN, Arkansas
    MEL MARTINEZ, Florida                EVAN BAYH, Indiana
    LARRY E. CRAIG, Idaho                THOMAS R. CARPER, Delaware
    RICK SANTORUM, Pennsylvania          BILL NELSON, Florida
    CONRAD BURNS, Montana                HILLARY RODHAM CLINTON, New York
    LAMAR ALEXANDER, Tennessee           KEN SALAZAR, Colorado
    JIM DEMINT, South Carolina
                        Catherine Finley, Staff Director
                   Julie Cohen, Ranking Member Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------
                                                                       Page
    Opening Statement of Senator Gordon Smith........................     1

                                    Panel I

    Howard Staab and Maggi Ann Grace, patient and patient advocate,
      Carrboro, NC...................................................     2
    Arnold Milstein, MD, Mercer Health and Benefits, San Francisco,
      CA.............................................................    18
    Bonnie Blackley, corporate benefits director, Blue Ridge Paper
      Products, Canton, NC...........................................    26
    Rajesh Rao, CEO, IndUShealth, Raleigh, NC........................    34
    Bruce Cunningham, MD, president, American Society of Plastic
      Surgeons, Minneapolis, MN......................................    44

                                    APPENDIX

    Prepared Statement of Senator Herb Kohl..........................    55
    Prepared Statement of Senator Ken Salazar........................    55
    Statement submitted by the Joint Commission on Accreditation of
      Healthcare Organizations.......................................    57
    Comments from Rudy Rupak, founder and head concierge,
      PlanetHospital.................................................    63

                                     (iii)

      THE GLOBALIZATION OF HEALTH CARE: CAN MEDICAL TOURISM REDUCE HEALTH
                                  CARE COSTS?

                                  ----------

                             TUESDAY, JUNE 27, 2006

                                           U.S. Senate,
                                    Special Committee on Aging,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:05 a.m., in
    room 215, Dirksen Senate Office Building, Hon. Gordon H. Smith
    (chairman of the committee) presiding.
        Present: Senator Smith.

         OPENING STATEMENT OF SENATOR GORDON H. SMITH, CHAIRMAN

        The Chairman. Good morning. We welcome you all, as we
    convene this U.S. Senate Special Committee on Aging. Our topic
    today is the Globalization of Health Care: Can Medical Tourism
    Reduce Health Care Costs?
        We are glad you are all here. We are missing a few of my
    colleagues for one reason or another, probably also the
    difficulty of traffic in getting here today. Most of the routes
    into this place have trees laying over them right now.
        Medical tourism refers to the practice of patients seeking
    lower-cost health-care procedures abroad, often packaged with
    travel and sightseeing excursions. Today we will hear about
    medical tourism from witnesses whose perspectives range from a
    patient who had heart surgery in India to a self-insured
    company that is considering adding overseas hospitals as an
    option in its employee health plan.
        Time magazine reports that 55,000 Americans traveled last
    year to Bumrungrad Hospital in Thailand for a variety of
    elective procedures. Many patients report they would return
    again for care in the future.
        Patients are not alone in exploring foreign health-care
    options. The West Virginia legislature presently is considering
    options for encouraging State employees to travel abroad for
    less-expensive medical care. Three Fortune 500 companies are
    investigating the best places to outsource elective surgeries.
        With the globalization of health care evolving at a rapid
    pace, it is important that we pause to consider why this is
    happening.
        The ease of international travel and the growth in quality
    health-care facilities in developing countries certainly plays
    a part. But I believe frustration with rising health-care costs
    in the U.S. is also a contributing factor. American medicine is
    less and less competitive.
        Americans should not have to travel overseas to obtain
    affordable health care. Yet health-care costs in the U.S.
    continue to grow at a rate higher than overall inflation. For
    the Nation's 46 million uninsured, traveling overseas for low-
    cost medical procedures, even with the added costs of travel
    and lodging, is now an understandably attractive option.
        You can see on the chart behind me the cost of many
    surgical procedures in foreign hospitals is significantly less
    than in the United States.
        While medical tourism may be attractive to patients who are
    unable to obtain health care at home, there remain many
    unanswered questions: Does lower cost equal lower quality?
    Could lower-priced medical care provided in developing
    countries drive down health-care costs in the U.S.? What will
    be the long-term impact of medical tourism on the U.S. health-
    care system?
        To explore these and other related issues related to
    medical tourism, I am asking several Federal agencies,
    including the Departments of Health and Human Services,
    Commerce and State, to convene an interagency task force.
        As globalized health care becomes an increasing reality, we
    must carefully consider the implications for U.S. health care,
    trade and tourism and economic policies. The interagency task
    force will enable U.S. policymakers to reach informed decisions
    in response to this new trend.
        I am very pleased that our first panel of witnesses is
    Maggi Grace and Howard Staab. He traveled to India in 2004 for
    Howard's mitral valve replacement surgery. They will discuss
    their experiences in trying to negotiate costs with U.S.
    hospitals and also tell us of the care that he received in
    India.
        So, Howard and Maggi, thank you for being here. We are
    anxious to hear your testimony and to ask you questions.
    Proceed.

      STATEMENT OF MAGGI ANN GRACE, PATIENT ADVOCATE, CARRBORO, NC

        Ms. Grace. Thank you, Senator Smith and members of the U.S.
    Special Committee on Aging. I appreciate the opportunity to
    testify before you today regarding health--care and the
    outsourcing of medical care to the developing world.
        We are here because in September 2004 I accompanied Howard
    to New Delhi, India, for the heart surgery he needed but could
    not afford in North Carolina, where we live only minutes from
    major medical centers of international reputation.
        Dr. Naresh Trehan replaced Howard's mitral valve at Escorts
    Heart Institute for a total cost of $6,700 as opposed to the
    estimated $200,000 at our local hospital.
        We stayed in India for 1 month. By early 2005, Howard was
    back at work full-time; his cardiologist in Durham reports that
    he is fine.
        The fact that everything turned out well for Howard and
    that India provides extraordinary medical care is not why we
    are here today. I am here to tell you how our own country's
    health-care system, supposedly the best in the world, failed us
    and why we were forced to travel halfway around the globe.
        The research I did that led to our choosing India does not
    make me an expert. But in the past few years, I have stayed in
    the hospital with my parents and friends on seven different
    occasions. I became an eye-witness to the difference in patient
    care between several American hospitals and at least one
    hospital in India.
        The discoveries I made compelled me to write a book
    entitled, ``State of the Heart: A Medical Tourist's True Story
    of Life-Saving Surgery in India,'' which will be published in
    2007 by New Harbinger Publications. In fact, I have asked
    Senator Clinton to consider writing the Foreword to my book.
        Companies are springing up all over our country to help
    patients travel to India or Thailand for medical procedures at
    a fraction of the U.S. cost. While I continue to assist these
    patients, my sincere ambition is to see the U.S. health-care
    system improved so that none of us find it necessary to leave
    our families and our doctors to receive medical treatment.
        In 2004, Howard went to his doctor for a routine physical.
    She was alarmed at the sound of his heart and ordered an
    echocardiogram immediately. The diagnosis: a flailing mitral
    valve with severe mitral regurgitation. We were shocked. Howard
    and his 31-year-old business as a carpenter/contractor were
    healthy, but Howard had chosen not to have health insurance.
        Howard is not the only one who, though healthy and
    physically fit all his life, will face an unexpected, life-
    threatening diagnosis requiring immediate attention without
    health insurance in place. In fact, he is only one of over 46
    million Americans who remain uninsured, either by financial
    necessity, denial of coverage, or by choice.
        It is, of course, a mistake to say that our government does
    not provide these people with healthcare. We do. Only we do it
    in what may be the least efficient, the most expensive and
    least effective way possible: by refusing to provide any
    necessary care until a patient's illness becomes a medical
    emergency. Then we do not turn them away; only then do we foot
    the bill.
        I came to understand the absurdity of this system when
    Howard and I faced his diagnosis.
        I requested a meeting with the CFO of our local hospital to
    explore the entire cost of mitral valve surgery as well as a
    payment plan. Howard was encouraged to apply for Medicaid. But
    Howard was not broke; he is not indigent. He makes a living,
    and he pays his bills. We knew he would not qualify for
    Medicaid or any other hospital discount based on income.
        The hospital bill alone was estimated at $100,000. They
    expected half up-front. The valve itself, the surgeon,
    cardiologist, anesthesiologist, radiologist and pathologist,
    all billed separately, would bring the total closer to $200,000
    if there were no complications. The surgeon would also want
    half up-front.
        I knew that hospitals and doctors contract with insurance
    companies and agree to accept whatever the companies deem the
    ``usual and customary fee'' for any given procedure. The CFO
    agreed that self-pay patients are responsible for inflated
    charges which are arbitrarily set by the provider.
        I offered to pay the hospital the full amount that any
    insurance company would pay, with a substantial amount up-front
    and the rest on a payment plan. The CFO said they had no way to
    do that. They were simply not set up to compromise in that way.
        I insisted that Howard could not be the only self-pay
    patient who faced the prohibitive cost of surgery. The CFO
    admitted he was not, but we were the first to come to him ahead
    of time and talk about it. Others, he said, ``Well, they wait
    until they are brought to the emergency room in an ambulance.''
        Where were we, a carpenter and an artist, to come up with
    $200,000 or even half up-front? If we had chosen to wait or if
    we had not found any alternative by turning to another country,
    I would have watched as Howard's mechanical valve problem made
    his heart work harder and harder until the exertion actually
    damaged his heart muscle and it began to fail.
        Of course, we would have preferred to stay in the Raleigh-
    Durham area to be near our family and friends, but we had no
    intention of waiting until he was in heart failure. Yet this is
    all our local hospital offered us.
        I cannot imagine a worse way to pay for health care: to
    require our emergency rooms to take patients in and pay for
    healthcare for the uninsured and under-insured only when their
    health problems have worsened to the status of an emergency,
    when those problems are the hardest to fix and the care they
    receive will be as chaotic, expensive and risky as possible.
        After learning Howard's diagnosis, we tried to obtain
    health insurance for him. His applications turned up
    astronomical premiums for policies that promised to disallow
    any claims regarding his heart for a year or longer. Howard's
    cardiologist said he could not wait a year for his surgery so
    that the insurance company would help pay for it; his heart
    would not last that long.
        We explored every alternative suggested to us, from
    surgeons in Argentina, Mexico and Texas to a robot in North
    Carolina. We decided to put our trust in Dr. Trehan, a U.S.-
    trained surgeon and founder of Escorts Heart Institute and
    Research Center, a state-of-the-art facility in New Delhi.
        He estimated the total cost of Howard's hospitalization,
    including all tests and doctors, would be under $10,000. We
    asked Howard's cardiologist for her blessing, applied for the
    appropriate visas, and flew to India.
        A friend created a Website, howardsheart.com, so I could
    communicate with our family and friends while we were abroad.
    The Website still draws global attention of patients, doctors,
    entrepreneurs, policymakers and researchers interested in what
    most call ``medical tourism'' and what we still consider to be
    the best option we had. We were not tourists seeking an exotic
    vacation while having inexpensive medical treatments. We were
    fighting for Howard's life.
        Our experience in India was successful. The total cost of
    our bill was $6,700 all-inclusive.
        Howard was the first American to have heart surgery at
    Escorts. The world was watching. The media--CNN, ``60
    Minutes,'' Bloomberg Magazine, The Washington Post, the Times
    of India and, most recently, Time magazine--would not be paying
    attention to an issue that was not of global concern.
        Here are some relevant observations.
        Insurance companies allow less than one-third of doctors'
    and hospitals' charges, and they pay only a percentage of that.
        Even if doctors discount their fees for self-pay patients,
    the hospital bill is prohibitive.
        The Center for Disease Control recommends innoculations for
    travel to specific countries. Insurance companies disallow
    claims for preventative immunizations for travel, yet they will
    cover treatment for those diseases if their insured subscribers
    might contract them overseas.
        Procedures are often available in developing countries
    years before the FDA approves them in the U.S. An example is
    the recent hip resurfacing that has just been approved.
        Highly skilled nurses in our hospitals are stretched beyond
    human limitations. Patients receive care based on degree of
    emergency. This means patients wait. During my seven stays in
    the hospital, I have changed bed linens myself, bathed and fed
    patients. I caught a disoriented patient climbing out of bed,
    tangled in her I.V. lines.
        We, as a country, value longevity over quality of life.
    Legislation supports this position. Looming malpractice suits
    keep doctors ordering tests and introducing extreme measures
    that are often unnecessary, unwanted, and always inordinately
    costly. Individuals who do not believe in prolonging life at
    any cost devote enormous amounts of their time and money to
    fight for the rights of their loved ones to end their lives
    with dignity. Choice is replaced with unwarranted expense for
    patients and health-care providers.
        In summary, if I were faced with the opportunity you now
    face, to heal a broken system of caring for the American
    people, I would begin with the end result. I would ask myself,
    what would a healthy nation look like? How can we make at least
    preventative care accessible and affordable? Why do we link
    employment with healthcare? What are the real costs of tests
    and medical devices? What is a reasonable margin of profit? How
    can we take the terror out of healthcare for everyone involved?
        You have an opportunity to listen to and answer millions of
    Americans, not only the uninsured and the under-insured, but
    employers, insurance companies, hospitals, doctors, nurses,
    patients and family members who are screaming, ``Crisis.'' We
    are calling for help. Please don't send us away.
        Thank you.
        The Chairman. Maggi, you ask what is a reasonable profit. I
    can't help but think that the difference between $200,000 and
    $6,700 will put a lot of pressure on the $200,000 if Howard's
    story continues to go out. I mean, that is a staggering
    difference.
        I wonder if you can speak to the quality difference. I
    mean, obviously the result was as good as, I guess, you could
    hope for, because he was a U.S.-trained physician. I assume it
    was done in a hospital.
        Ms. Grace. An extremely state-of-the-art facility that is
    impeccable compared to the ones I have stayed in here.
        The Chairman. So when you went into that, there was no
    quality diminution between that and others that you had seen in
    the United States?
        Ms. Grace. Only in the reverse.
        The Chairman. It was better.
        What was the cost in terms of travel and time, lost wages
    and things like that had it been done here? What do you add
    onto the $6,700?
        Ms. Grace. Well, the longer version, which is in my written
    testimony, is that we were in the hospital a total of 3 weeks,
    both of us with three meals a day--well, when he could eat. I
    stayed with him. The quote of the $200,000 estimate was for a
    5- to 7-day stay and one surgery. So it would have been way
    more than that, had we been here to do that.
        The quality of care over there was extraordinary. It was
    quick. Howard never waited once for a test or for a prompt
    response from the nursing staff or the doctors.
        Of course, you know, he was the first American to be there,
    so there was this attention. But I never saw anything different
    for anybody else there.
        The Chairman. Were your physicians here--I mean, you said
    they released you to go and do this. Obviously that must have
    included that they would take you back when you came.
        Ms. Grace. Yes, sir.
        The Chairman. Did they warn you about anything that proved
    not to be true? I mean, were there things that they said,
    ``Well, yes, but you are running a real risk if there is a
    complication. You won't have any legal recourse''? Or did you
    have legal recourse?
        Ms. Grace. People have asked us that since we came back. No
    one asked us in the few days before we left because we went in
    a very big hurry. I wasn't thinking about suing anybody if
    something happened to Howard, and I don't think he was. It was
    the farthest thing from our minds.
        In answer to your question about Howard's cardiologist, we
    were relieved when she said she had done her homework with her
    colleagues and found out that we were right, that India was an
    exceptional choice and that they were all U.S.-trained
    doctors--a lot of them were U.S.-trained doctors, and Dr.
    Trehan was of the highest reputation.
        She had no problem with us going, except Howard shouldn't
    have been traveling. So, we went with his medical records. I
    talked to all the pursers on the flight and made sure they
    understood that if he should go into some kind of shortness of
    breath or breathing problems or heart problems that they knew
    what to do.
        The Chairman. What airline were you on?
        Ms. Grace. KLM was in there, but I forget what we started
    on. American? No, Continental and then KLM. But I had to speak
    to each one so they knew what we were doing.
        The Chairman. Is this doctor in India and is India, as a
    nation, are they advertising to get more business like this?
        Ms. Grace. It is, in fact, just the opposite. I mean, I
    think they would like to think they are. But in terms of what
    we do in America to advertise, I don't think they are up to
    speed on it.
        They have a Website, but the Website isn't geared to
    respond to you in 24 hours. I think we have been accustomed to
    immediate response when we e-mail somebody or contact a
    Website.
        So they have patients from all over, from Britain and
    neighboring countries and Saudi and places like that. But we
    were the first Americans to actually persevere long enough to
    get through and go.
        The Chairman. I am interested in your comments about
    insurance and what they would pay for and what they wouldn't
    pay for.
        Now, you did not have insurance. Is that right, Howard?
        Mr. Staab. Correct.
        The Chairman. Now, if you had had insurance, would they
    have discouraged you from going over? Were you told that by
    insurance companies, ``Don't go to India; we won't pay for
    it''?
        Ms. Grace. Well, we learned that afterwards. But it didn't
    come when we applied for insurance. That was the first thing I
    did, was to try to see if we could get Howard a policy. Even if
    it would be, you know, enormous premiums, we thought it still
    could work out financially for the $200,000 and that it would
    be better. But then they would disallow anything related to his
    heart for a year, and he wouldn't have lived that long.
        The Chairman. I would think an insurance company would be
    very interested in lower expenditures for health.
        Ms. Grace. Well, the premium for Howard was $300-and-
    something. I contacted my Blue Cross broker and just said,
    ``What is it?'' He said, ``Well, it is about $300.'' Then I
    told him the mitral valve diagnosis, and he came back with
    $1,600 a month and no coverage for the heart for a year.
        So, we did the math on that and tried to figure out, if he
    had been paying $300 a month for all this time, would it have
    still covered the $200,000? Anyway, it was----
        The Chairman. But you paid out of pocket, and you got----
        Ms. Grace. With a credit card. They said, ``Do you have a
    Visa?'' So it was simple.
        The Chairman. Well, yours is an amazing story. You have
    published it through all the outlets you spoke of, ``60
    Minutes'' and--
        Ms. Grace. They contacted us, but yes.
        The Website still is this huge magnet, people find us
    somehow. I don't know if they are looking under--I never called
    it ``medical tourism'' until the publisher renamed my book. But
    I don't know how they found us.
        But as soon as the Times of India picked it up. The day
    after we arrived in Delhi, the Times of India picked it up. We
    had something like 2,000 hits on the Web site that morning. So
    it sort of spread like fire after that.
        The Chairman. I read Tom Friedman's book, ``The World Is
    Flat.'' Were you included in it? I don't recall.
        Ms. Grace. I don't know.
        The Chairman. You may need to add another chapter.
        Ms. Grace. We have been in several books. The Cato
    Institute included Howard's story in their book last year.
    Researchers have been calling from all around. People are doing
    doctoral work on this issue. So I expect we have popped up in
    places we don't even know.
        The Chairman. Well, you are making history here. We are
    thankful for your willingness to come and share this very
    remarkable story.
        Howard, you look great. Are you back to work now?
        Mr. Staab. Thank you very much. I am working full-time
    building homes and loving my days.
        The Chairman. Well, we wish you the very best.
        Mr. Staab. Thanks.
        The Chairman. You have added a great deal to the meeting of
    this morning and the Senate record. We thank you very, very
    much.
        Ms. Grace. Senator Smith, you asked me a question that I
    realized I didn't answer.
        The Chairman. Well, you can answer it.
        Ms. Grace. Well, it will just take me one second, and that
    was about the difference in quality of care.
        I think one of the most impressive things I have learned to
    tell myself is that if I have an elective procedure that is
    required--''elective'' meaning I am not in an ambulance--I will
    seriously consider going to India, even though I have Blue
    Cross-Blue Shield that would probably pay 80 percent. Because
    not only would it probably be cheaper than the 20 percent I
    would have to pay, but I believe the care would be far better
    than I would get here.
        The Chairman. That is----
        Ms. Grace. Thank you.
        The Chairman [continuing]. Quite a testimony. Thank you
    very much, both of you.
        Ms. Grace. Thank you.
        Mr. Staab. Thank you.
        [The prepared statement of Ms. Grace follows:]
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        The Chairman. We will now call up our second panel.
        They will include Dr. Arnold Milstein, who is the chief
    physician at the U.S. Health Care, Thought Leader at the Mercer
    Health and Benefits. He also serves as a MedPAC commissioner.
    He is consulting three Fortune 500 companies that are
    investigating options for offshoring elective medical
    procedures for their employees.
        We will also ask Ms. Bonnie Blackley, who is the benefits
    director for Blue Ridge Paper Products in Canton, NC. Blue
    Ridge is in the process of expanding its employee insurance
    plans to offer overseas health-care options.
        They will be joined by Mr. Rao. Mr. Rao is the CEO of
    IndUSHealth, a global health-care service company that arranges
    for Americans to obtain medical care in India. We are going to
    want to know about that advertising program.
        Dr. Bruce Cunningham is the president of the American
    Society of Plastic Surgeons and will be discussing patient
    safety issues.
        We appreciate so much all of you being here.
        Dr. Milstein, why don't we start with you?

     STATEMENT OF ARNOLD MILSTEIN, MD, MERCER HEALTH AND BENEFITS,
                           SAN FRANCISCO, CA

        Dr. Milstein. Thank you, Mr. Chairman.
        Several innovative large American employers asked me to
    assess the feasibility of using advanced hospitals in lower-
    wage countries to provide non-urgent major surgeries. They
    intend to add them to their U.S. hospital networks and
    incentivize U.S. employees and dependents to use them.
        Large employers are pursuing this option for three reasons:
    first, lower cost. The typical combined facility and physician
    charges per surgery in these hospitals is, based on my
    international shopping observations, 60 to 85 percent lower
    than insurer-negotiated charges in the U.S.
        The Chairman. Sixty to 85 percent?
        Dr. Milstein. Yes. In exhibit A, I have shared the
    international prices that I have been able to obtain through
    phone calls on behalf of these large employers.
        Sixty to 85 percent cost reduction for major surgeries
    would easily offset travel, and first-class hotel costs both
    for the patient and an accompanying family member. It would
    also fund a sizable economic incentive for the patient and
    generate large residual savings for the sponsoring employer.
        The second reason is trusted quality-of-care accreditation.
    The Joint Commission, or JCAHO, accredits most U.S. hospitals
    for participation in the Medicare program. JCAHO also has
    accredited 88 non-U.S. hospitals via its Joint Commission
    International affiliate. Many of these hospitals offer board-
    certified surgeons who trained at U.S. or UK teaching
    hospitals.
        The third reason is their sense of fiduciary
    responsibility. American human resource executives feel
    obligated to pursue any solution that would benefit both
    employer and employee. This obligation is felt most strongly
    among employers and labor unions with substantial numbers of
    lower- and lower-middle-income workers who can least afford to
    pay more for health care or for health insurance.
        The fastest percentage point rise in uninsurance among
    working adults is now in the middle quintiles of American
    working household incomes. In 2006, the average health spending
    for a working family of four exceeded the entire annual
    earnings of a minimum-wage worker. Two thousand four was the
    first year in which average state Medicaid spending exceeded
    state K-12 education spending.
        The outmigration of Americans for surgical care is a
    symptom, not a solution. The emotional benefit of close access
    to familiar physicians, friends and family will remain
    important for major surgeries. In addition, many other
    countries do not offer consumers meaningful redress for
    healthcare negligence.
        The interests of non-wealthy Americans and their employers
    would be far better served by a U.S. health-care system that
    aggressively and perpetually re-engineered its processes to
    deliver an internationally distinguished level of quality at a
    much lower cost.
        In their joint 2005 report, the National Academy of
    Engineering and the Institute of Medicine estimated that 30 to
    40 percent of current U.S. health-care spending is attributable
    to waste from insufficiently engineered processes of care
    delivery.
        However, until America's major public and private payors
    better collaborate in creating a profoundly more performance-
    sensitive environment around American physicians and hospitals,
    well-engineered care delivery will remain purely conceptual and
    our hospitals will continue to fall short in international
    benchmarking of value.
        The most important first collaborative step in creating a
    more performance-sensitive domestic healthcare environment is
    public access in beneficiary anonymized format to the
    physician-identifiable full Medicare claims database. Its
    analysis by the private sector would rapidly enable American
    consumers and purchasers to identify and better reward surgeons
    and other American physicians who excel in efficient total
    healthcare resource use, as well as in quality.
        This, in turn, would send a transformative message
    throughout America's entire healthcare supply chain, including
    to hospitals and investors in new bio-medical technology. That
    supply chain is exquisitely sensitive to physician signals. It
    would be transformed by a new physician-mediated message that
    improvements in both affordability and quality will be rewarded
    best.
        By creating a highly performance-sensitive environment
    around our domestic health industry now, we can staunch and
    eventually reverse the flow of Americans traveling abroad to
    find more affordable care.
        The proximate root causes of American hospitals' loss of
    domestic market share are lower wages in less-developed
    countries and discriminatory pricing by global drug, device and
    equipment manufacturers. One step upstream in the causal chain
    is insufficient collaboration by America's public and private
    purchasers to mold a U.S. healthcare industry that delivers
    world-class value through superior process engineering.
        Thank you, Mr. Chairman.
        [The prepared statement of Dr. Milstein follows:]
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        The Chairman. Doctor, what do you think of what Howard did,
    going to India like that?
        Dr. Milstein. I think it was a wholly reasonable response
    by a well-informed, value-seeking American consumer.
        The Chairman. The three Fortune 500 companies you are
    advising, would you advise them to look at Howard's option?
        Dr. Milstein. Yes, I would.
        The Chairman. But the point of your testimony, though, is
    America ought to fix its system so Americans don't have to go
    abroad.
        Dr. Milstein. Absolutely.
        The Chairman. Won't this growing competition have the
    downward pressure that will help to drive that?
        Dr. Milstein. I think it will. Although, you know, my sense
    of where we stand based on the Institute of Medicine estimates
    of 40 percent waste in current American health-care spending,
    you know, suggests we may need more than one source of
    pressure.
        The Chairman. Yes, exactly. I will probably have another
    question for you, but thank you very much.
        I think we are exposing to viewers on C-SPAN remarkable
    options that actually exist out there. Frankly, I can think of
    an awful lot of Oregon companies who are now looking to do
    these kinds of things and are negotiating union contracts where
    this is an option. They have no choice. Economically they can't
    sell enough of their widgets to pay for the rising cost of
    health care.
        I think one of your points is that it is not just from one
    price pressure on the system. It is drug companies. It is
    equipment suppliers. It is obviously cost of litigation. All of
    these things have upward pressure on American pricing.
        Dr. Milstein. Yes. Thank you, Mr. Chairman.
        The Chairman. Thank you.
        Bonnie Blackley, take it away.

    STATEMENT OF BONNIE BLACKLEY, CORPORATE BENEFITS DIRECTOR, BLUE
                    RIDGE PAPER PRODUCTS, CANTON, NC

        Ms. Blackley. Senator Smith, thank you.
        Blue Ridge Paper Products in Canton, NC, is a paper
    products manufacturer. Our company was built by Champion
    International Paper in 1908.
        In May 1999, local union employees partnered with a venture
    capital fund to buy the assets. The employees' stake was
    financed through a 15 percent reduction in wages, and wages and
    benefits were frozen over the 7-year term of the buy-out
    agreement.
        We have about 2,100 employees, predominantly male, over age
    48, with decades of service and several health risk factors.
    They work 12-hour, rotating shifts, making it extremely
    difficult to manage health conditions or improve lifestyle.
        Our health-care claims costs at the end of 2000 was just
    over $13 million. At that time, we projected that if left
    unchecked, 2006 year-end costs would be $36 million.
        Since 2000, we have made plan revisions and developed and
    implemented several innovative cost-control programs. For
    example, we have an onsite medical center. We have put in
    population health management.
        These actions will result in 2006 claims costs of $24
    million. Though not the $36 million projected, health-care
    claims have increased over 75 percent since 2000.
        What is the impact of these claims on our bottom line?
    Since the union buy-out in 1999 to the end of 2005, we have
    paid out $107 million in health-care claims. Our company has
    lost $92 million since the buy-out.
        Even with our single-digit yearly cost increases, I can't
    help but think, if the provider community had responded to our
    requests for help over these past few years, we could have been
    a profitable company.
        Clearly, continued medical cost trend is unsustainable,
    even for financially sound employers with younger, healthier
    employees. Ever-increasing health-care costs have contributed
    to slower profit growth, lower wage hikes, a delay in hiring
    new permanent workers, and an erosion of employee benefits.
        We are very concerned about our ability to continue to
    provide retiree medical coverage, which is a bargained benefit
    for our hourly people. As a matter of fact, March 1, 2005, we
    eliminated retiree health coverage for our salaried employees.
        Employers are angry. We are fed up. We are desperately
    seeking relief from a system that ranks 37th worldwide in
    quality of care, but it costs more per capita than other
    industrialized nations.
        We do not get commensurate value for our health-care
    dollar. We are not treated as paying customers; are not
    reimbursed for medical errors and hospital-acquired infections.
    We are constantly told by health-care leaders that American
    health care is the best in the world, yet employees feel
    compelled to hire patient advocates. CMS announced in March
    that they plan to provide cancer navigators to certain patients
    as answers for coping with today's medical system.
        Employees are so desperate for health care that they are
    willing to commit fraud on employment and insurance forms to
    obtain coverage for themselves or ineligible family members.
    Why do we tie health coverage to employment?
        Running out of ideas on how to cut costs, a segment on ``60
    Minutes'' several months ago caught my attention. I began
    seeing articles in trade publications about medical tourism,
    which we like to call global health care, the uninsured and the
    under-insured having surgery at outstanding surgical facilities
    in other countries.
        The more I read, the more intrigued I became. Hospitals
    approved by Joint Commission International and compared to
    five-star hotels, surgeons credentialled in the United States,
    registered nurses around the clock, expenses 80 to 90 percent
    cheaper, and better outcomes. Why not?
        After reading about IndUSHealth, I contacted them to see if
    they would be willing to work with us to make our services
    available to our employees. IndUSHealth agreed to meet with our
    benefits task force. Initial shock changed to curiosity,
    curiosity to interest, and interest to an ``a-ha'' moment.
        IndUSHealth has helped us create a DVD that will soon be
    mailed to our employees. The DVD explains the process of having
    surgery in India and includes testimony from individuals that
    have been to India for surgery. The DVD message encourages
    interested employees to be part of an employee group that will
    be traveling to India in the near future as a part of our due
    diligence process.
        Surgery in India will not impact the benefit levels of our
    current plan. Whatever benefit plan is chosen by the employee,
    the option to have surgery performed in India is a personal
    choice. The benefit level for this option will be 100 percent
    reimbursement for expenses, plus an additional cash incentive
    to be used to cover the cost for a companion to accompany the
    member.
        Employers compete in a global marketplace with a global
    economy. We can address our health-care crisis, or we can
    outsource it. With healthy competition, our health providers
    will become more efficient and productive, provide better
    services and products, be held responsible for inferior
    service, or go out of business just like the rest of us.
        Thank you.
        [The prepared statement of Ms. Blackley follows:]
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        The Chairman. Bonnie, you described the employees' response
    to this. First, as I take it, it was somewhat shocked and
    offended maybe? Or necessity required that they listen and
    consider?
        Ms. Blackley. We have spent since 2000 educating our
    employees on the costs of health care. It is their company; the
    union actually bought our company. They are very aware of what
    our health-care costs are year to year.
        We have been out-of-the-box, innovative. This was another
    opportunity for our benefits task force to take a look at some
    unusual responses to health-care costs.
        After our task force meeting in which IndUSHealth was there
    and they explained the process, you could tell every slide that
    they showed, more and more people were going, ``Oh, my gosh, we
    never knew about this.'' I even had one guy call me after the
    meeting, and he said, ``Is it wrong to want surgery to go to
    India?'' We really had some excitement there.
        This sounds like a good deal. It sounds like excellent
    health care. It is affordable. This will save our company a lot
    of money.
        The Chairman. Was it an ESOP that the union did?
        Ms. Blackley. Yes, it was.
        The Chairman. The employees bought it.
        Ms. Blackley. Yes.
        The Chairman. Generally unions are very down on
    outsourcing, but they are obviously encouraging this
    outsourcing.
        Ms. Blackley. It is very unusual to have union members that
    also are owners. So a lot of times, I think they are at
    conflict. Even as our health-care costs have gone up, they want
    to keep their benefits. They know we are struggling to be able
    to afford to do that.
        As a matter of fact, we just bargained and negotiated with
    the union last week. I don't even know the outcome of those
    negotiations.
        But our folks are hurting. They have not had any wage
    increases for 7 years. They gave up 15 percent of their
    benefits in order to finance the company. We are really
    searching.
        We have had two employees in one of our locations that had
    to have major surgery. One was a heart valve replacement. The
    other was a transplant. They had worked for us less than 3
    months. Obviously some questions on their post-employment
    information were not correct.
        Folks are shopping for employers to see who has good health
    coverage so they can afford to have these surgeries. I think it
    is correct to say that people are putting these things off
    until it is absolutely an emergency.
        The Chairman. Can you describe the procedures? Is it heart
    surgery, cancer?
        Ms. Blackley. The heart valve replacement, we actually got
    a proposal from IndUSHealth. Here it was going to cost anywhere
    from $68,000 to $198,000. That was the range of costs that we
    received from the hospital.
        The proposal we got from IndUSHealth was for that patient
    and a companion. Here you would have been in the hospital 3 to
    5 days; there, 10 days with an 8-day recoup period at a resort.
    Everything included, travel, food, was $18,000.
        So we were looking at the difference between $18,000 and,
    best-case scenario, $68,000. So it is very attractive for
    employers to take a look at global tourism.
        The Chairman. Have the numbers of your employees increased
    dramatically going to IndUSHealth?
        Ms. Blackley. That was the first actual proposal that we
    have gotten. We have not actually rolled this benefit out to
    our employees yet. We will be doing that in the next few weeks.
        So until we actually roll this out to all of our employees,
    we have been looking at situations that we find out about on an
    individual basis to see if they might be a candidate for going
    to India. It is just a matter of time.
        The Chairman. Very good. Thank you so much, Bonnie.
        Mr. Rao.

         STATEMENT OF RAJESH RAO, CEO, INDUSHEALTH, RALEIGH, NC

        Mr. Rao. Thank you, Senator Smith. Thank you for the
    opportunity to testify on a topic that hits very close to home
    for us and why we have created this company called IndUSHealth.
        I am the CEO of IndUSHealth. It is a company based in
    Raleigh, NC. It provides a global health-care service. It
    addresses the problem of growing lack of access to affordable
    health care faced by an increasing number of our citizens and
    employers throughout the U.S.
        With health-care costs having grown to levels that were
    just unimaginable just a few years ago, there is a universal
    desire to exploit opportunities to stretch our health-care
    dollar.
        IndUSHealth provides one such attractive opportunity, by
    unlocking the gates to affordable health care. We offer high-
    quality medical treatment and travel programs for U.S. patients
    desiring care in world-class hospitals in India as an
    alternative to what has become oppressively expensive care in
    the U.S.
        Why India? Well, there are several reasons. India is
    rapidly emerging as a world leader in global medicine, with
    over 150,000 patients having visited India for medical
    procedures from overseas.
        Super-specialty hospitals in India have made significant
    investments in the recent years to build and staff state-of-
    the-art facilities with the latest equipment and consumables,
    many of which are, in fact, sourced by American companies.
        Not only have these hospitals introduced several amenities
    to cater to the unique needs of patients going from the U.S.
    and other international patients, they have also been able to
    attract several U.S.- and U.K.-trained physicians to return to
    India to practice at their facilities. With over 37,000
    physicians of Indian origin practicing in the U.S., many
    Americans are already comfortable with the talent and expertise
    of Indian physicians.
        The quality of care available at these leading hospitals is
    comparable to the best institutions in the U.S. With a focus on
    advanced research and having implemented processes that have
    helped them get accredited by the U.S. Joint Commission, these
    hospitals now boast outcomes that are amongst the best in the
    world.
        Top-flight, one-on-one nursing care is made available to
    patients around the clock. Their fluency in English allows
    Indian doctors, nurses and administrators to communicate well
    with American patients.
        Above all, India is able to offer a large and sustainable
    cost advantage. By bundling unique services that are geared to
    the unique needs of international patients, Indian hospitals
    are able to command premium price points, which, from our
    standpoint, still remain a mere fraction of the U.S. costs.
        When it comes to cost differential, there have been
    numerous cases where, expensive procedures, as the previous
    panelists have described, are available at somewhere between 10
    to 20 percent of the equivalent cost in the U.S.
        So what is the IndUSHealth advantage? Recognizing the
    opportunity to provide a meaningful solution to a growing
    problem, IndUSHealth has now formulated a well-structured
    offering that connects individuals and companies to affordable,
    high-quality health-care facilities overseas.
        We have established key partnerships with India's premiere
    hospitals and physicians that help us offer an integrated
    process while assuring the highest levels of service to our
    patients. We provide personalized case management and handle
    the complexities of dealing with health-care providers on the
    other side of the globe. We work with local physicians to
    assist with pre- and post-operative needs of the patients. We
    also take care of exchanging medical records and making travel
    arrangements for patients.
        Making sure that each patient is well-informed and assured
    of the highest standards of care at the lowest cost possible is
    an important part of IndUSHealth's offering.
        We have helped treat several patients overseas for a wide
    range of treatments. The majority of our patients have never
    traveled abroad, yet they have educated themselves and arrived
    at the conclusion that their needs will be best met outside our
    borders.
        They are always delighted and provide glowing testimonials
    of the level of care and attention that they receive all
    throughout the process. Their collective experiences have
    proven that it is indeed possible to overcome the perceived
    difficulties and emotional barriers that many Americans face
    when first exposed to this new concept.
        Our elderly patients are thrilled to have an option that
    keeps them from having to wait for Medicare benefits. Often
    taking care of their ailment sooner helps them improve the
    quality of their life and allows them to lead self-sufficient
    and independent lives.
        We coordinate with self-insured employers seeking to lower
    expenses by offering our services as an option to their
    employees. Statistically, since a relatively small number of
    cases result in the biggest expenditures, employers are able to
    save up to 20 percent of their medical costs even if a
    relatively small subset of their plan participants elect to go
    overseas for care. This helps them avoid the less attractive
    alternatives of reducing head-count or reducing profitability.
        So by paving the path for individuals and employers to
    access low-cost, high-quality health care in India, IndUSHealth
    is proud to play a key role in providing access to health care
    for a growing number of our citizens and to help them lead
    healthy, independent and productive lives.
        Thank you.
        [The prepared statement of Mr. Rao follows:]
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        The Chairman. Mr. Rao, what kind of medicine is provided to
    Indians? Is it a national health-care system?
        Mr. Rao. It is not. It is basically a private----
        The Chairman. Fee for service?
        Mr. Rao [continuing]. Fee-for-service system. So most of
    these hospitals have an obligation to price their services in a
    way that obviously caters to the large array of circumstances,
    including local care as well as people coming from overseas.
        The Chairman. Your facilities, have you built those and
    staffed them for the Indian nation or for this international
    market? Have you seen a niche here that you are trying to fill?
        Mr. Rao. We built this primarily to serve the needs of
    Americans, because we noticed that we are becoming less
    competitive as a country because of the challenges that we face
    in our health-care costs and how that translates to a burden
    for all of us. We are all ending up paying the increased costs
    in one way or the other.
        Employers, particularly, are challenged with having to make
    some very hard decisions on how to contain costs.
        The Chairman. How competitive would your services be for an
    Indian as against a hospital on the other side of the city?
    Would yours be more expensive?
        Mr. Rao. It would be more expensive. Mainly because it has
    got the added amenities built into it in terms of catering to
    typically a companion that goes with the patient, having a
    larger room at the hospital, providing for travel services back
    and forth, and creating an experience that basically makes the
    person feel like they have a concierge service, which the
    locals don't need because they have a support structure around
    them.
        The Chairman. Do Europeans use this, or just mostly you are
    marketing this to the American people?
        Mr. Rao. Our company's thrust is entirely in North America
    and for Americans and Canadians right now. There are others
    that serve other markets. For us, frankly, it is a whole
    different ball game if we want to try to enter and solve the
    needs of other citizens of other countries.
        The Chairman. What percentage of Americans, what percentage
    of Canadians are you serving?
        Mr. Rao. Right now, it is roughly 80-20, majority
    Americans, a smaller percentage of Canadians.
        The Chairman. Bonnie, I am wondering if you think your
    employees are going to use IndUSHealth. Obviously they have a
    brochure, a program, a slide show that shows them a facility
    apparently that is very much like what they would find in North
    Carolina. Do you think they are apt to take that?
        Ms. Blackley. I think that the DVD that we are going to
    send out to our employees is going to go a long way in
    explaining the process, showing how it works.
        We are also going to have a group of employees, volunteers
    that will be going to India in the next few weeks to take a
    look at it, to come back, so that employees, union members,
    management--we can actually get the word out as to what we saw,
    what we experienced, what did we believe is the quality of care
    in India.
        The Chairman. Mr. Rao, what kind of increases have you seen
    in this niche that you are filling? I mean, you don't have to
    tell me your sales, but have you seen a lot of growth?
        Mr. Rao. It has been tremendous. Compared to last year when
    it was in its infancy, just starting out, there has been a lot
    of interest now. The news stories are certainly helping people
    become aware of this faster. They are all anxious to know if,
    in their circumstance, they can take advantage of it.
        The Chairman. You obviously know part of the overhead of an
    American facility relates to malpractice insurance. What kind
    of assurances do you give, and what kind of recourse do
    patients have?
        Mr. Rao. Well, the Indian system also has a similar
    structure. The costs are much lower; the awards, in case of any
    kind of litigation, are also proportionately lower.
        So we inform patients of what they do and don't get in that
    system, and the fact that there are problems in the way the
    care was delivered overseas, they would have to deal with a
    foreign court system in order to----
        The Chairman. Well, your facility is subject to American
    law because you do business here and you have a headquarters
    here as well, I assume.
        Mr. Rao. We do.
        The Chairman. But your outcomes have been good?
        Mr. Rao. Yes.
        The Chairman. That is a very commendable model. Certainly,
    as somebody who believes in competition and who has dealt with
    it in his own industry, I salute you for your vision and your
    insight and your competitiveness.
        Mr. Rao. Thank you. It is delightful to be able to help
    people who have essentially run out of options. It is always
    wonderful to get engaged with them and prove that there is a
    way out for them.
        The Chairman. Would it be fair to say that most of your
    clientele are middle-class Americans? They are not
    necessarily--they are people who are running out of options who
    are looking, or who don't have health care, or who have a union
    plan that has this benefit but the cost is there, the co-pay is
    much higher, and then the union is saying to the company,
    ``This is another option,'' and the cost is way down there. Are
    those your clients?
        Mr. Rao. That is primarily our client base, the middle-
    class.
        There are also some unique treatments available in India.
    We do have folks from, a different standpoint try to access
    services that are just fundamentally not available here because
    either they are not yet FDA-approved or they are undergoing
    trials at this stage.
        So we do provide them a service, and we find that there is
    a lot of interest in that as well.
        The Chairman. Are you coordinating any of your services
    with India Air or the airlines generally to----
        Mr. Rao. Not yet. Right now we are keeping it very
    competitive because we find that, depending on when someone
    wants to go and what sort of specific travel preferences they
    have, it is very hard to get a single airline to really cater
    to all the needs out there. So we instead have a way to get
    them excellent, rates at any airline.
        The Chairman. But are airlines aware of medical tourism?
    Are they taking any interest in it? Are they providing any
    services to cater to it?
        Mr. Rao. The airlines, interestingly, have rules set up to
    take extra care of patients anyway.
        The Chairman. Anyway.
        Mr. Rao. So we can essentially piggyback on that.
        We are looking at concierge services, obviously, at the
    airports, at the destination. We provide that to our patients.
    At the transit points, we are looking into how the airlines
    could go the extra step for them.
        But they already have special services in place to cater to
    those that need extra care getting back and forth.
        The Chairman. Can you describe the breadth of the
    procedures you make available at IndUSHealth? Is it plastic
    surgery? Is it heart surgery? Is it----
        Mr. Rao. It has included plastic surgery. Although we had
    started out looking at cardiac, any orthopedic types of
    procedures, we have found that there has been a lot of interest
    in cosmetic and dental as well. There is a lot of interest in
    expensive dental surgeries.
        The Chairman. OK. Macrofacial surgery as well.
        Mr. Rao. That is right.
        The Chairman. Are your physicians, are they by and large
    U.S.-trained?
        Mr. Rao. They are. They are U.S.- and U.K.-trained for the
    most part.
        The Chairman. U.K.-trained. It is an amazing model.
    Congratulations on your success.
        Mr. Rao. Thank you.
        The Chairman. Bruce Cunningham

    STATEMENT OF BRUCE CUNNINGHAM, MD, PRESIDENT, AMERICAN SOCIETY
                  OF PLASTIC SURGEONS, MINNEAPOLIS, MN

        Dr. Cunningham. Chairman Smith, thank you very much for the
    opportunity to appear today. My name is Dr. Bruce Cunningham. I
    am a board-certified plastic surgeon. I am the chairman of the
    Department of Plastic Surgery at the University of Minnesota. I
    am currently the president of the American Society of Plastic
    Surgeons, ASPS.
        I want to thank you for the opportunity to appear today.
    Perhaps as a provider, my viewpoint might be a little bit
    different than some of the viewpoints of the policymakers.
        The American Society of Plastic Surgeons is the largest
    organization of board-certified plastic surgeons in the world,
    with over 6,000 members.
        We have probably discovered cosmetic medical tourism long
    before these other movements have been described and have noted
    the attention that has been paid to it. We are concerned about
    the growth of it, particularly in the area of elective cosmetic
    surgery.
        Although numerous factors are likely involved in the growth
    of medical tourism, there is at least anecdotal evidence to
    suggest that patients considering care outside of the States
    are basically doing it with the motivation of price-saving.
        ASPS has a long-standing commitment to enhancing patient
    safety and improving the quality of care for our patients. We
    believe that some of the best plastic surgeons in the world are
    our board-certified members here in the United States.
        For those who choose to go overseas for elective surgical
    procedures, however, there are a number of critically important
    issues to consider. We believe patients should make this
    decision very carefully, in essence, caveat emptor, buyer
    beware.
        Without a complete understanding of the medical standards
    for the health institution or facilities, the medical
    providers, their surgical training and credentials, and also
    the post-operative care associated with surgery, a patient can
    be ill-informed and, worse, at significant risk.
        Foremost, it is important to realize that surgery is
    serious business, and cosmetic surgery is no different from
    other surgical procedures. Every surgery, including cosmetic
    surgery, has a degree of risk. As a board-certified plastic
    surgeon, I manage and reduce these risks every day. It is part
    of my overhead.
        Patients who choose to travel abroad for a cosmetic surgery
    vacation, with price as a driving force in their decision, may
    be making an exceptional decision that could increase their
    risk factors. These patients are susceptible to unwanted and,
    in some cases, disastrous outcomes.
        I am personally well aware of cases which are reported in
    the media and which confront myself and my colleagues and other
    physicians of patients returning to this country with
    disfigurement and nearly fatal infections associated with
    unaccredited hospitals and unlicensed providers.
        Patients simply cannot make informed decisions about
    medical care or establish a proper patient-physician
    relationship from a travel brochure.
        Some medical tourism trips are marketed as vacations. Risks
    may increase as procedures are performed during cosmetic
    surgery vacations. Although enticing, vacation activities are
    often not appropriate for recovery after any kind of surgery.
    Precautions and appropriate care must be received in order for
    the patient to properly heal and reduce the possibility of
    complications.
        Infections are the most common complication seen in
    patients that go abroad for cosmetic surgery. Other
    complications can include unsightly scars, blood collections,
    and unsatisfactory results. Travel combined with surgery can
    also significantly increase the risk of complications, such as
    blood clots following the long flights required to reach these
    overseas destinations.
        Complications can also occur during surgery in even the
    best hands and may require acute care and hospitalization. An
    important consideration is whether the quality of the health-
    care institution and the medical provider is truly comparable
    to what the patient would receive at home. In some cases, as we
    have seen, the answer may well be yes. In other cases, the
    patient may be taking a large gamble with their health care and
    well-being.
        As the profit margins of these overseas operations
    increase, less scrupulous and qualified individuals would be
    tempted to enter the market, which is certainly what we have
    seen in cosmetic surgery.
        Also in many cases, post-operative care is nearly as
    important as the procedure itself. How will this care be given,
    by whom, and for how long following these surgical procedures?
        The potential for post-surgical complications, as with any
    surgery, present particular challenges for the medical tourism
    patient. What happens to the patient once they have returned
    home if they have a complication or if they are unhappy with
    their results? Do they fly back to the site where they had
    their procedure? This is not likely in many cases.
        Do they have insurance coverage for complications resulting
    from elective procedures overseas? Patients should be aware
    that their insurance company likely will not cover
    complications for their procedure, a fact that we have learned
    from elective cosmetic procedures.
        Surgical training and credentials as well as facility
    standards may not be verifiable in all cases. In order for
    cosmetic surgery to be performed safely, it requires the proper
    administration of anesthesia, sterile technique, the latest
    instrumentation and equipment, as well as properly trained
    surgeons.
        Patients need to ask a lot of questions and may not be able
    to get the answers.
        Is the practitioner providing the medical procedure
    appropriately certified? For instance, in some cases we have
    become aware of, a physician with training and credentials in
    internal medicine should probably not be performing surgical
    operations like abdominoplasty, face lift, breast augmentation
    or breast reconstruction. In the U.S., the American Board of
    Medical Specialties provides the gold standard for verification
    and training.
        For some developing third-world countries, there are no
    credible processes for verifying physician training, education
    and experience. Further, there are no U.S. laws that protect
    patients or mandate the training and qualifications by
    physicians or the facilities in which they practice. There may
    be no legal recourse for surgical negligence by the physician
    or the facility.
        An important question to ask is whether the facility is
    accredited or licensed. In the U.S., there are rigorous rules.
        Although there may be many skilled and qualified physicians
    practicing all over the world in outstanding surgical
    facilities, ASPS cautions patients to consider these critically
    important patient safety issues before making a decision based
    solely on price. Patients should have all the information they
    need to make a truly informed decision and one with their best
    health in mind.
        So we hope that this discussion is helpful to the committee
    in considering this important issue. We commend you and the
    other committee members very soundly for initiating this very
    interesting discussion, which will hopefully lead to a greater
    awareness on the part of the public.
        Thank you.
        [The prepared statement of Dr. Cunningham follows:]
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        The Chairman. Well, Dr. Cunningham, you make some very
    important points, and we value those.
        I am wondering, do you ever--now, as I understand it, the
    American Society of Plastic Surgeons, you are the board, you
    are the one that certifies the competence of a physician.
        Dr. Cunningham. We only accept board-certified plastic
    surgeons as members.
        The Chairman. In your association.
        Dr. Cunningham. It is the board, which is one of the 24
    American Board of Medical Specialty Board, which actually
    certifies throughout the country.
        One of the issues we have, even in this country, is that
    there are boards that aren't AKC-registered boards, if you
    will. A member of the public cannot determine from the colorful
    language written in Latin on the diploma on the wall whether
    this is a real certification or not.
        Perhaps in these smaller pilot programs, very highly
    licensed and credentialled organizations and surgeons are being
    used. But as the profit spreads through this nascent industry,
    there will be much greater temptation for less-qualified
    partners. How will we verify that?
        The Chairman. Does the board certify plastic surgeons who
    later go and practice in places like India?
        Dr. Cunningham. We certainly certify plastic surgeons who
    go on volunteer missions throughout the world. I would imagine,
    with respect to the issues of licensure, an American-trained
    plastic surgeon could receive licensure in India or any
    European----
        The Chairman. So that doesn't disqualify them, moving and
    practicing in another country?
        Dr. Cunningham. Absolutely not, not at all.
        The Chairman. That is a very, very good point.
        Mr. Rao, do you have board-certified surgeons, plastic
    surgeons?
        Mr. Rao. Absolutely.
        I think Dr. Cunningham brings up some excellent points in
    terms of why the public needs to be aware of the quality issue
    and the safety issue. That is one of the reasons we have taken
    express steps to assure that in all aspects of our
    relationships with our providers we are dealing only with the
    best of the best. We don't allow for any kind of lapses in
    terms of quality at any given point.
        But, yes, indeed, many of the physicians are indeed U.S.
    board-certified. They have, in fact, gone back to India and
    helped raise the bar over there, which is an important aspect
    of why it has become more attractive in recent years.
        The Chairman. I imagine you recognize the value for
    American patients of having American certification from the
    different boards that provide this assurance, quality
    assurance. I assume that that is the case if America is your
    niche.
        Mr. Rao. Absolutely. That is why I think the Joint
    Commission has played an important role in making sure, at
    least at all touch points with the patient, that the hospitals
    have processes in place that match, if not exceed, you know,
    the average hospitals here.
        The Chairman. Dr. Cunningham made a very good point about
    the value of a relationship with a patient and knowing them. Do
    you do teleconferencing before a patient ever goes to India? Do
    you ever have a teleconference where they know who is going to
    be doing the surgery and it is discussed with them?
        Mr. Rao. Absolutely. That is one of the things that some of
    the patients like to do, is be able to talk to their doctor via
    teleconference and make sure they are comfortable with who they
    are working with----
        The Chairman. OK.
        Mr. Rao [continuing]. What their credentials are.
        The Chairman. Mr. Milstein, are those the kind of things
    that you advise Fortune 500 companies to insist upon as they
    consider some of the medical tourism?
        Dr. Milstein. Yes, that is part of our due diligence
    process, verifying the hospital is, for example, Joint
    Commission-accredited and that the physicians performing the
    procedures can indeed document board-certification status in an
    advanced country.
        The Chairman. Bonnie, does the union member ask those
    questions? I mean, Dr. Cunningham makes a really good point. We
    don't know what to ask. I mean, half of it is written in Latin
    up there on the----
        Ms. Blackley. Oh, they certainly do. I think that they are
    very savvy medical customers, much more so than you would
    think.
        What has been the length of time that you have spent with
    your doctor at your last physician's visit?
        The Chairman. Your point is that that hasn't been so great
    either?
        Ms. Blackley. I think the normal visit is from 4 to 6
    minutes. You probably waited for a couple hours before then.
        Why is alternative care so popular and billions and
    billions being spent? People are searching. Even in my family,
    I went misdiagnosed for several years--so did my daughter--and
    had severe ramifications because of not being diagnosed
    correctly.
        I have story after story after story from my employees on
    the poor quality of treatment that they have received, either
    no diagnosis or a misdiagnosis. We really have a crisis in this
    country. We are not getting quality health care. Yet it is
    unaffordable.
        We are searching. We are looking in other areas. We have
    got to work with providers and hospitals here to make our
    system better.
        We have tried to do that at Blue Ridge Paper Products. We
    met with a medical practice across the street from the mill
    before we put in our medical center. The first thing they told
    us when we walked in the door was, ``Don't ask us to discount
    our prices any more. Oh, by the way, we have got a problem with
    your onsite diabetes program.'' We worked with six other large
    employers in western North Carolina to try to work with our
    local hospital on a better discount. At least give us the same
    discount as you give the large carriers that are in that
    region. They told us if our utilization did not remain where it
    was, they would even take away that discount.
        We have done a lot to try to work locally with our
    providers, to no avail. They don't have to work with us. They
    will readily admit that they do cost-shifting and that they
    don't have the answer. I had one physician tell me, ``Well, if
    it is a death spiral, then I am going to make all the money I
    can while I can.'' We need our system here in the United States
    to wake up. We need it to become better. We need to work as a
    team. If the carriers and the providers, the employers and the
    employees can all work together--we have tried that approach.
    It has not worked in our community.
        The Chairman. Dr. Cunningham, obviously your association is
    aware of this new and apparently growing competition. Is that
    the case?
        Dr. Cunningham. Certainly, we are aware of it. We have seen
    it for many years with patients, again, opting for better price
    and going to Mexico, going to Costa Rica and elsewhere, Brazil,
    to get cosmetic surgery.
        Frankly, the risk/patient-safety side of it is becoming a
    global problem, just as the world is flattening, and we have
    heard that part of it discussed today.
        This issue of people from Germany leaving a higher-cost,
    higher-provider network and going to, say, emerging Russian
    republics, Turkey and other countries, where the standards, as
    I have said, just cannot be verified to have this kind of
    surgery, and then coming back to Germany, to France, and being
    a burden on that health-care system.
        I am touched by the economics of it. I am touched by the
    stories that we have heard today. We clearly need to change the
    system. I agree with Dr. Milstein. This is a symptom, not a
    solution.
        A hundred and fifty thousand patients going to India hardly
    touches the surface of the problem we meet here. But, you know,
    on the other hand, these people are coming back. They are
    presenting a burden for our health-care system. They are
    prevailing on the goodwill of everyone to take care of them,
    and that is probably not fair either.
        The Chairman. I understand, Doctor, that ironically your
    segment of medicine, plastic surgery, really does not have an
    insurance overlay. It is really fee-for-service all the time,
    isn't it? I don't know of many insurance policies that cover
    plastic surgery.
        Dr. Cunningham. Well, plastic surgery has two major
    components: the cosmetic part, in which case, you are
    absolutely right.
        The Chairman. I should clarify. I mean cosmetic.
        Dr. Cunningham. Then the reconstructive part----
        The Chairman. Reconstructive is usually related to cancer
    and things like that----
        Dr. Cunningham. Right.
        The Chairman [continuing]. It would include those.
        Dr. Cunningham. In the reconstructive part, we are in the
    same boat. You know, we are finding it is harder to provide
    services for our patients because frequently they are denied
    coverage or their coverage is marginal, and they have to make
    difficult decisions about whether to have a breast
    reconstruction.
        I mean, we recognize clearly that the problem is in the
    system and that it is a system problem that needs to be dealt
    with on a system level.
        The Chairman. We have all seen these T.V. programs of
    horror stories of plastic surgery outcomes, of people who are
    addicted to having plastic surgery.
        I wonder, Mr. Rao, do you see people coming over with that
    addiction? Do you stop and tell them, ``There is enough here
    already; stop''?
        Mr. Rao. We do. We tend to, you know, be conservative and
    err on the side of trying to make sure that we don't have
    people that are going there, that basically shouldn't be going
    there, such that it could be almost risky for them.
        But another very important point is, that fundamentally we
    are facing a situation where, to whatever degree medical
    tourism grows, it is never going to create the level of
    competition that physicians and hospitals here will ever have
    to worry about.
        Because, as it is, we know that the providers are busy
    today, and they are going to get busier because we are all
    growing older and we are all relying more on the system to take
    care of our needs. The number of doctors entering into the
    system is shrinking. It is not growing proportionately.
        So given that, I don't believe we will ever run into a
    situation where everyone just chooses to go. It is always going
    to be a smaller percentage of folks that will go. Those that
    have needs that have emerged to the point where they have no
    other options will go.
        So, in essence, it will be a healthy form of competition
    that gets introduced into the system and not one that basically
    goes out of control.
        I do agree with the fact that there may be some
    unscrupulous operators that come in and start lowering the bar.
    But we, as an organization, take it as our responsibility to
    make sure that anyone that comes through us is not going to
    face any such circumstance.
        Because the doctors themselves are very, very risk-averse.
    We are finding that in cases where we feel something might be
    acceptable, the doctors in many cases have pushed back and said
    no.
        So that is a very good sign, because they are saying, ``We
    don't want to take chances with this. You know, our reputations
    are on the line. Our hospitals' brands are on the line. We
    don't want to take any chances.''
        So it is going to be self-governing from that standpoint.
    But that doesn't mean that we don't need regulation to look
    closely at how this trend evolves.
        The Chairman. Well, let me conclude this hearing with just
    an expression of real appreciation for the contribution each of
    you have made here.
        This is a very important topic. You should know that,
    thanks to C-SPAN, there are many people watching you today. A
    large number of seniors follow the work of this committee. You
    have added measurably to their understanding and their options.
        We also want to say how glad we are that Howard Staab had
    such a great outcome and that he is here and healthy.
        We thank you, Maggi, for your testimony here today, as
    well.
        All the best. Have a great afternoon. Try to stay dry. We
    are adjourned.
        [Whereupon, at 11:35 a.m., the committee was adjourned.]
                                A P P E N D I X

                                  ----------

                    Prepared Statement of Senator Herb Kohl

        Thank you, Mr. Chairman, for holding today's hearing. We
    welcome all of our witnesses and look forward to their
    testimony.
        ``Medical tourism''--or the practice of traveling to other
    countries to receive discounted medical procedures--is taking
    off in the United States, raising a number of questions for
    this panel. What is driving health care costs to such a height
    that Americans are seeking care overseas? How has the crisis of
    the uninsured in this country reached such a peak that some
    find foreign travel for medical procedures more practical than
    health insurance? Finally, how are we protecting Americans who
    do travel overseas from fraud, incompetent providers and most
    importantly poor health outcomes?
        The United States accounts for $1.7 trillion of the $3.3
    trillion spent annually for health care worldwide yet ranks
    37th worldwide in quality of care. Even more unsettling: there
    are 45 million Americans without any form of health insurance.
    As we hear from our witnesses today about Americans who have
    chosen to escape our health care system, we are also reminded
    of the how much we have left to do to provide every American
    with affordable, quality health care here at home.
        I look forward to hearing from our panel on both the
    benefits and risks of medical tourism. Again, thank you, Mr.
    Chairman, for holding this important hearing.
                                    ------

                   Prepared Statement of Senator Ken Salazar

        Chairman Smith and Ranking Member Kohl, thank you for
    organizing yet another hearing on an emerging phenomenon:
    medical tourism.
        It is clear that the emerging industry of medical tourism
    not only impacts America's seniors but thousands of others who
    travel abroad to obtain both elective and non-elective surgery.
    It also impacts the families of these patients, their American
    doctors (if they have access to regular medical care), and the
    U.S. health care and health insurance industry.
        I find this topic both fascinating and disconcerting.
        I am pleased that the quality of care in places like India,
    Thailand, and Malaysia has evolved so that Americans feel
    comfortable going under the knife for complicated surgeries
    like bypass surgery or more routine surgeries like knee
    surgery.
        However, I also believe that we must examine the root cause
    of this phenomenon: the rising cost of health care and frequent
    unavailability of affordable health insurance.
        I have introduced legislation with Senator John McCain, the
    National Commission on Health Care Act (S. 2007), which will
    undertake a fresh review of health care in the U.S. with one
    goal: implementing the best ideas to provide real solutions for
    the millions of Americans trapped in this Nation's health care
    crisis.
        While medical tourism may be included in the discussions of
    the Commission, I believe there are additional policies that we
    can implement that are not as drastic as encouraging
    individuals to travel across oceans for a hip replacement.
        Today, over 46 million Americans, including over 766,590 or
    19% of Coloradans, lack health insurance. Despite this, the
    cost of health care is rising--pricing out more and more
    Americans. By 2015, we are expected to spend $1 of every $5 of
    our GDP on health care.
        Of course, not all of the 46 million are able to catch a
    flight to Delhi or Bangkok for medical care. That said, I do
    realize that our health care crisis has caused thousands of
    middle class Americans, who cannot afford health insurance and
    do not qualify for Medicaid and Medicare can, to travel abroad.
        I am very interested in hearing from our first panel--Mr.
    Howard Staab and Magi Grace--about they came to travel to India
    for cardiac surgery.
        In this week's Time Magazine, the cover story ``India
    Inc.'' illustrates the intensity of the growing medical tourism
    industry, by documenting the growing number of medical schools
    and hospitals that have popped up in the last decade.
        It has led to a dramatic transformation of mid-sized cities
    like Mangalore, India, where the medical schools number five,
    and there are at least four dental schools and 14 physiotherapy
    colleges.
        These new hospitals are fueling an industry that is
    expected to be at least a $2 billion annual industry by 2012.
    Today, according to the best statistics available to us today,
    over 100,000 foreign patients traveled to India in 2005 up for
    just 10,000 in 2000. These may not all be Americans, but we
    have every reason to believe that Americans are a significant
    percentage of this number.
        In the West, a country that is closer in proximity--
    Mexico--provides Americans retirees, including Coloradans, with
    access to access to inexpensive cosmetic and dental procedures.
        What does this mean to our health care industry? What steps
    are we taking to ensure that Americans are protected and
    accessing high-quality care? How is the health insurance
    responding to this growing trend?
        I hope that the panelist on our second panel will help us
    reveal answers to these questions. Most importantly, I hope we
    can better determine if medical tourism can help us in solving
    the root cause of our health care crisis: the rising costs of
    health care.
        Again, thank you Chairman Smith and Ranking Member Kohl for
    holding this hearing.
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