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Outsourcing American Health Care Conventional wisdom holds that health care is one of the industries least vulnerable to dislocation from globalization. After all, like many service businesses, health care is delivered where it is purchased, right? If an American goes to a hospital for an MRI scan, won’t that scan be read by a local radiologist? And if the MRI scan shows that surgery is required, surely the surgery will be done at a local hospital in the United States. Until recently, this was true, but we are now witnessing the beginnings of globalization in this traditionally most local of industries.

Consider the MRI scan: The United States has a shortage of radiologists, the doctors who specialize in reading and interpreting diagnostic medical images, including X-rays, CT scans, MRI scans, and ultrasounds. Demand for radiologists is reportedly growing twice as fast as the rate at which medical schools are graduating radiologists with the skills and qualifications required to read medical images. This imbalance between supply and demand means that radiologists are expensive; an American radiologist can earn as much as $350,000 a year.

In the early 2000s, an Indian radiologist working at the prestigious Massachusetts General Hospital, Dr. Sanjay Saini, thought he had found a clever way to deal with the shortage and expense-send images over the Internet to India where they could be interpreted by radiologists. This would reduce the workload on America’s radiologists and also cut costs. A radiologist in India might earn one-tenth of his or her U. S. counterpart. Plus, because India is on the opposite side of the globe, the. mages could be interpreted while it was nighttime in the United States and be ready for the attending physician when he or she arrived for work the following morning. As for surgery, here too we are witnessing the beginnings of an outsourcing trend. For example, recently Howard Staab, a 53-year-old uninsured self-employed carpenter from North Carolina, had surgery to repair a leakiilg heart valve-in IndiaI Mr. Staab flew to New Delhi, had the operation, and afterward toured the Taj Mahal, the price of which was bundled with that of the surgery.

The cost. including airfare, totaled $10,000. If Mr. Staab’s surgery had been performed in the United States, the cost would have been $60,000 and there would have been no visit to the Taj Mahal. Howard Staab is not alone. According to one estimate, some 150,000 Americans elected to have surgery outside of the United States in 2006, and predictions call for the numbers to grow rapidly. The management consultancy McKinsey & Co. predicts that medical tourism (overseas trips to have medical procedures performed) could be a $2. billion industry in India by 2012. So will demand for American health services soon collapse’ as work moves offshore to places like India? That seems unlikely. Regulations, personal preferences, and practical considerations mean that the majority of health services will always be performed in the country where the patient resides. Consider the MRI scan: To safeguard patient care, U. S. regulations require that a radiologist be licensed in the state where the image was made and that he or she be certified by the hospital where care is being given.

Given that not many radiologists in India have these qualifications, no more than a small fraction of images can be interpreted overseas. Another complication is that the U. S. government-sponsored medical insurance program, Medicare, will not pay for services done outside of the country. Nor will many private insurance plans-not yet anyway. Moreover, most people would prefer to have care delivered close to home, and only in exceptional cases, such as when the procedure is not covered by their medical plan, are they like! to consider the foreign option. Still, most experts believe that the trends now in place will continue. Given that health care costs in America are the highest in the world, it seems likely that increasingly, a small but significant p~rcentage of medical service will be performed in a country that is different from the one where the patient resides. The trend will certainly get a big boost if insurance companies start to offer enrollees the option of getting treatment abroad for expensive surgeries, as some are rumored to be considering. 14 –

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