As more companies look to send employees abroad and as globalization expands across all industries, one issue that exists for all expatriates is the ever-changing healthcare industry. Healthcare is undoubtedly a need for all, yet healthcare facilities and services differ greatly across continents and even countries, resulting in varied healthcare costs all over the world.
While the procedures for an X-ray, knee surgery or simple check are, for the most part, the same across the globe, the costs associated with treatments and services can vary greatly. A heart bypass can be nearly 50% more in the United States than in Canada, according to a study titled Comparing Price Levels of Hospital Services Across Countries from the Organisation for Economic Co-operation and Development, or the OECD. This obviously raises questions and concerns for companies and organizations that cover employees that live all over the world.
Paul Andrews, a senior consultant at international consulting group Mercer, commented that there is a "continuous education piece" that they have to undergo with clients.
"We are talking to finance managers as well as HR, explaining the difference in local systems and the fact that in some countries, the balance of power is tipped towards providers," he added.
Linda Torr, a senior consultant at Aon Hewitt, which is another international consulting group, also offers her input, saying clients must be "fully aware" that there may be "peaks and troughs" in terms of the amount of money they pay for their employees healthcare.
One of the biggest contributing factors to the shifts in healthcare costs are the many differences that occur in the areas of economic development, healthcare systems and the expatriate populations. One indicator that demonstrates these differences is the proportion of a country's GDP spend on healthcare. These differences can be staggering. For example, the US spends almost 18% of its GDP toward healthcare while in Qatar, it is just less than 2%, 91% in Cuba and 47% in Brazil.
"For almost every country there is a different version of the state versus private health solution and the standard of quality and cost differs widely," said Nic Brown, head of global distribution at international private medical insurance (iPMI) provider Aetna International.
Dr Ulrike Sucher, a medical director of Allianz Worldwide Care (AWC), the iPMI provider, notes that the US government funds about 40% of healthcare through their two healthcare programs, Medicaid and Medicare, and says that this is an example of a country where government funding greatly affects the costs of private healthcare.
"They have agreed the lowest possible price with the hospitals and providers and therefore providers need to seek revenue from the private sector," she says. "When you look at the published prices you can be certain that nobody pays these fees. The discount depends on the buyer power of the purchaser and can range from 10-70%."
In Europe, on the other hand, their social insurance systems are able to keep costs low as economies of scale are leveraged, argues Carolyn Paul, general manager for iPMI provider Aria International Health Solutions.
"Government hospitals are more likely to use generic drugs as opposed to brand names and perhaps not the most highly advanced technologies or therapies," she says.
Another point that is important to consider is the that it is more expensive to receive healthcare in some countries and regions. Stephen Ryan, director of medical services at AXA PPP International, the iPMI provider, notes that just a few miles or kilometers can make a large difference.
Health insurance providers also cite that another challenge is the fierce competition between providers and the increasing numbers of providers in the industry. Dr Sucher, from AWC, gives Hong Kong as a prime example of where competition is strong. Hong Kong is densely populated, with many wealthy Chinese, and has about 12 private hospitals that are almost constantly operating at maximum capacity. With such high demand, the hospitals are "extremely profitable" and have very few incentives to provide discounts.
Even though the healthcare providers and professionals may say that the increased costs are because of higher quality service, insurance companies are usually careful with the correlation between the two variables.
Nic Brown, from Aetna, notes that it is dangerous to assume that "the more you pay the better it is or, conversely, the less you pay the worse it is." He uses an example of someone suffering knee damage in Sierra Leone, where the costs would be because of the need to be medically evacuated to South Africa.
He also says that there are some great headway in regions such as China and the Middle East, which are investing heavily in the healthcare industry and offering high quality services to their customers. "We see places like India, Thailand and Malaysia where the facilities are excellent and more competitive than the surrounding locations," adds Paul Andrews from Mercer.
The US is one of the most expensive places to receive healthcare in the world, and the extent of the differences in medical and hospital costs between the US and other countries is aptly conveyed in the 2011 Comparative Prices Report published by the International Federation of Health Plans.
"The real problem is the unit cost of episodes of care rather than over-treatment," argues Tom Sackville, the Federation's chairman. "Take the case of a common item like an MRI scan. It's about the bargaining power of providers over payers. It's hard to imagine that, if you have the same MRI machines and level of staffing, there is any justification for the costs being twice or three times as high."
Despite the varying costs and the somewhat bleak outlook, health insurance providers and intermediaries have many examples of achievements in keeping costs low. Many insurance companies have seen success in offering a "steady stream" of clients to healthcare facilities and professionals.
"We tend to avoid creating too many exclusion lists," said Stephen Ryan, from AXA PPP International. "But we can steer customers with a light touch towards facilities that offer a good balance of quality and value. If we have a significant concentration of business then we really can secure discounts."
He adds that the need for local expertise is crucial, and this need has resulted in partnerships with Third Party Administrators (TPAs). He says that AXA PPP International has three TPAs in Africa -- in South Africa, Kenya and one "trouble shooter" employed to "mop up claims in a whole range of complicated places." There are many benefits to having these partnerships. Some of those benefits include partners visiting providers and verifying customers and the conditions that they are claiming. In addition, they may also be able to obtain special deals or discounts with the local healthcare providers.
AWC's Dr Sucher notes that an insurance company has many options to take on the increased costs that are charged in some areas of the world. She also says that utilizing co-payments and deductibles can have a big impact on customers, and tracking fraud, which is a growing problem all over the world, especially in countries where there is little or no regulation, will remain crucial.
Aetna International's Nic Brown offers the opinion that using data is also very important. He notes that Aetna has a team of nurses that do a variety of services, including managing treatment and educating their patients on medical best practice. This information, in turn, greatly assists Aetna.
In addition, health insurance intermediaries are relying on the insurance companies to challenge some out-of-control costs.
"We've seen bills come through where bandages are charged at £50 and a couple of paracetemol for £10," reports Mercer's Paul Andrews. "We would expect an insurer to be negotiating on those costs, managing and checking and pushing back on some charges and not accepting three different types of scan when only one is sufficient."
In his opinion, he thinks that insurance companies may increase the amount at which they take issue with providers in areas where healthcare costs have seen dramatic increase, such as Dubai.
Paul Andrews, from Mercer, adds to this point that intermediaries play a key role in this situation and offers the solution that consolidating plans internationally may be a way to leverage premiums while then "fine-tuning" a policy by offering benefits on a per-country basis.
One thing that does remain clear is healthcare costs between countries and regions will continue to vary for many years. The Towers Watson Global Medical Trends Survey 2012 confirms this idea. Austerity-bound Europe has seen inflation rates fall, yet Latin America continues to realize double-digit increases in most countries. Providers in these regions continue to take advantage of the growth by increasing prices yet keep their costs lower than the US. In this environment and climate, it creates an even higher need for intermediaries, like Globalsurance, to keep their strategies competitive and adaptable.