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Health insurers and providers are looking for ways to grow outside of the United States. Here’s a look at some of the tactics that are picking up traction.
Now that consolidation among large health insurance companies has mostly run its course nationally, many companies have nowhere to grow within the United States. “This is because outside of population growth, post-Obamacare there are very few uninsured Americans left or people are simply set on not getting insurance,” says Ralph Judah, director, Global Markets Lead, Health Plans, Deloitte consulting firm, Boston.
JudahGiven this, health insurers are looking for ways to grow outside of the U.S. Their tactics include offering insurance products for ex-pats in other countries, providing coverage for citizens in foreign countries, owning medical facilities abroad, and paying for customers traveling internationally to get more affordable medical care-called medical tourism.
Benedetto“As workforces become more globally mobile, the demand is growing for insurance and other services to support individuals working outside of their home countries,” says Richard di Benedetto, executive vice president, Aetna International, London, which provides health benefits to more than 650,000 members worldwide and helps develop health systems for governments, corporations, and providers.
LangAccording to Robert Lang, managing director, Bupa Global, London, which provides global health insurance products and services to customers in 190 countries, serving the needs and wants of globally-minded and globally-mobile customers offers a huge opportunity. “This is a growing demographic and also the fastest growing market in global healthcare,” says Lang.
In particular, he sees a distinct expansion opportunity for insurance providers who want to participate in the international space, particularly if they partner with an international provider.
One advantage of operating in a global marketplace is having the ability to develop an external perspective. “Many insurers operate in a closed model and have closed minds about what is possible,” Judah says. “We are now seeing new, innovative digital and low-cost service models."
Doing business internationally isn’t always smooth sailing, however. “Cultural differences in the various market geographies we’re involved in can be challenging, as can staying on top of the different regulatory requirements for those markets,” di Benedetto says. “It’s a cost of doing business.”
Lang says the challenge of being in an international business is maintaining your global offering, while also serving your customers in a local way. “That is why we continue to move from a centralized to a regional business model in our priority markets,” he says. “We want to serve our customers in their own culture, language, and time zone, while giving them access to our global healthcare expertise.”
ColemanSome markets may have a limited supply of good local employees. “You may need to bring in expatriates, which can be expensive,” says Francis Coleman, head of Health & Benefits, Global Services & Solutions, Willis Towers Watson advisory firm, Los Angeles.
While doing business globally has its challenges, Coleman believes it is good for an insurance company’s bottom line because it diversifies its income. A bulk of the expense is incurred when setting up infrastructure and paying compliance and legal costs associated with obtaining operating licenses.
There is also the cost of understanding the regulatory environment. “Products may need to be customized, depending upon a country’s markets and regulations,” di Benedetto says. “In building a world-class business, it’s key that Aetna continues to be flexible and understanding as it navigates through our global business while staying true to our values and commitment to compliance.”
Clinicians in foreign countries, particularly specialists, have found niche businesses in telemedicine as well as in remote monitoring and diagnosis. “Many medical facilities are using offshore doctors to perform diagnoses, because they charge a lot less than U.S. clinicians," Judah says. For example, an offshore radiologist can read computerized tomography scans and magnetic resonance images or a physician can see a patient online and conduct a video interview in order to make a diagnosis.
It’s also becoming more common to outsource coding-a highly manual task-to businesses in India and the Philippines. In addition, staffing businesses provide qualified medical personnel, most notably nurses, to facilities worldwide. Given the nursing shortage in the United States, this has fulfilled a great need.
“The entire cost structure of care delivery in countries outside of the United States is much lower, which presents real opportunities to exploit and arbitrage the differences in pricing,” Judah says.
Coleman has observed some well-known hospital groups such as the Cleveland Clinic becoming more involved in international business. “The clinic has set up medical facilities in the Middle East,” he says. He is also seeing more U.S. companies entering the telemedicine business, as overseas patients want to access the best U.S.-style healthcare.
From an insurance provider perspective, Lang reports that international private medical insurance is the sixth largest private medical insurance market in the world and it is expected to almost double by 2018, especially as more businesses and individuals operate on an increasingly international scale.
Coleman also expects the international private medical insurance market to continue to grow, even though the baseline cost of insurance premiums outside of the United States are a fraction of what they cost stateside. “Despite many countries having social security or national health systems, a huge demand for private care exists given long wait times for care,” he says.
Aetna International is involved in another venture-it works with U.S. and international employers as well as governments and health agencies in foreign countries to help them better manage their citizens’ and workforces’ health-understanding their needs for building and delivering local solutions that improve access and control rising medical costs. “These actions have helped us to do more than simply expand our international business; we have learned new ways to serve members and customers around the world,” di Benedetto says. Many countries face the same problems as the United States-the rising cost of care, aging populations, an increasing number of people with chronic conditions, and offering access to affordable care.
When looking to expand globally, Judah says health plans look for countries with similar industry structures, competitive structures, private healthcare opportunities, and cultures. For these reasons, Australia is a popular choice. Malaysia and Singapore have also been targeted because their health system structures are similar to those in the United States and they have high-quality, well-trained physicians.
Africa, which lacks infrastructure, is a newer market. “Some payers entering that market, with the help of technology, can enter without the need for some of the traditional infrastructure and resources required,” Coleman says. "Africa, home to more than 50 countries, has a lot of potential.” Few competitors on the ground offer high-quality care-most are in the more developed markets of Kenya, South Africa, Nigeria, Egypt, and Morocco. The Middle East, where demand is substantial, is also an attractive market given the high levels of premium spend for medical insurance.
Lang says, “We will continue setting up regional operations where the biggest concentrations of our current and prospective customers exist-the globally minded and globally mobile.” As a result, Bupa Global now has four new operating regions which center around a large concentration of its customers: Bupa Global Latin America, Bupa Global North America, Bupa Global Greater China, and Bupa Global Middle East.
“Over the coming years, we will launch a new set of tiered international private medical insurance products in our priority markets,” Lang adds. It has already begun launching the new product range in the United Kingdom, Mexico, Hong Kong, China, Chile, Panama, the United Arab Emirates, and Guatemala.
Aetna International has a physical presence across the globe. Its reach is organized by five major regions (Americas; Europe; Middle East and Africa; Greater China; and Southeast Asia), with an in-country presence in each, totaling more than 1,000 employees worldwide who support more than 700,000 members.
From an insurer standpoint, Coleman says Brazil is currently a less-attractive market due to the country’s massive size, the regional spread of medical facilities, and governmental regulations, as well as the fact that the country is experiencing a significant recession. But UnitedHealthcare found a niche when it acquired Amil in 2012-one of the dominant local health insurance carriers.
Judah also advises against pursuing markets in Brazil. "Although the top of Brazil’s multi-tiered healthcare system is as good as the United States’ system, the bottom tier is a classic third-world system,” he adds.
India and China have large populations and demands, making them less desirable. “Both countries have restrictions on the percentage of ownership that an insurance company can have,” Coleman says. “In India, an insurer can only have 49% ownership of a company; it would have to find a partner so it wouldn’t have full control. China also has a complex structure for foreign insurers to enter the market.”
Judah would also not recommend Russia, which has an antiquated health system offering circa 1950s American medicine.
Among medical specialties, Judah sees a fair amount of action in the surgical arena, most notably in orthopedic and cardiac surgeries, and related specialties such as anesthesiology. “In the future, I think you will see more geriatric activity, rehabilitation services, and long-term care migrating offshore,” he says. “We’re already seeing a lot of this in Panama.”
Coleman is seeing efforts in improved basic care-such as vaccinations-at hospitals in Africa, where high-class care and medical facilities are lacking. In India, with 80 million people predicted to have diabetes in the next few years, diabetes care is a major focus.
By examining how other payers operate, Judah says U.S. healthcare executives can see that constructing and maintaining lower-cost systems is feasible. "They can learn how to create low-cost health solutions from places such as India,” he says.
Along those lines, Coleman says U.S. healthcare CEOs can clearly see how inefficient the U.S. healthcare system is, and that its administrative costs are substantial. “Some markets don’t have the same level of bureaucracy and fragmentation of delivery as the U.S. healthcare system, which is very complex,” he says.
Edelheit says executives can learn about best practices. “They can come away more knowledgeable because someone else may have a better way of doing something,” he says.
Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.