Medical Tourism Means Medical Competition

Medical tourism is accelerating, as well it should. Advancing biotechnology, computing power and materials science means that (a) the practice of good medicine is coming down to pretty much the cost of regulation plus the cost of the people running the show, and (b) many more regions of the world have the technology base, medical community and level of economic success to do the job well.

A Filipino doctor has partnered with a Hong Kong-based company to give his countrymen hope in experiencing renewed health and strength with autologous stem cell transplants. There is so much controversy surrounding stem-cell research because of cloning issues but plastic and cosmetic surgeon Dr. Florencio Lucero believes that autologous transplants will not only help Filipinos but also enhance medical tourism in the Philippines. In fact, he said less than a fourth of his over 20 stem cell patients are Filipinos.

This sort of thing is "eat your lunch out from under you" competition for the biotechnology and medical industries of over-regulated US and Europe. Here, competition is relatively muted, squashed beneath the regulatory burden of patents, trials, compliance with a thousand inane laws. Those comparative few who source enough capital make it past the regulatory costs move into the realm of protectionist policies and short term gain - the barrier now behind them is the fence against competition, and it is in their interest to keep that fence high. A high fence means high profits and less of a need to try anything new and better to keep the money coming in.

Let me say this: human beings are damn lazy when there isn't a spear prodding them in the back. It's our nature. Competition is that spear, the serious threat of your profits and edges vanishing elsewhere, forcing you to inventively accomplish more and better for less. Competition is the alchemical weapon that transforms all the worst aspects of human nature into tools to bring progress to all as rapidly and cheaply as possible. The more aggressive, open and unrestricted the competition, the better the resulting service is for the customers - folk like you and I.

So we should all be very pleased to see Asian biotech and medical entrepreneurs eating the very lunch out from underneath late-stage researchers and new businesses in the US and Europe. It's the only way that those insulated folk inside the regulatory fence are going to feel any meaningful pressure to help tear it down - and thus better serve us over the long term.

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Comments

My, my, 20 patients. the number a typical American internist sees in a morning at the office. I don't think this is going to make anyone in Big Pharma do anything different than what they are already doing.

As for being burdened with patients, clinical trials and laws, this guy is just a snake-oil salesman with a new brand of snake-oil. In the absence of a clinical trial in patients with some measurable outcome, he has no proof that his "stem cells" do anything at all.

Which laws do you propose eliminating to help move along the magic potion this guy is selling? Laws that say you can't sell something in the US without proof it works? Laws that say you have to be sure the cells are not contaminated with bacteria? Laws that say you have to know how many cells there are in the syringe when you inject someone with these stem cells? Maybe the laws that say you need to do enough testing to see if the cells cause tumors or allergic reactions when injected? How about the laws that let the inspectors take a look at the back room where the stuff is supposedly made?

Don't think that laws against use of embryonic stem cells are hindering the use of "autologous" stem cells. It is not relevant.

I, for one, will take the modern, western medicine as regulated by FDA/EMEA (the European FDA) over this stuff any day.

Posted by: Jay Lozier at January 5th, 2007 7:17 PM

Jay: Fair commentary on the quality of the example quoted. Better ones exist to demonstrate the cost-benefit argument between similar operations, such as VesCell's overseas activities.

There will always be a market for people who have your preferences for proof and quality assurance no matter what the cost in medicine never commercialized to that level. But it is criminal to force everyone to suffer that fate; bear in mind that under the present FDA and EMEA rules, most legacy therapies from the last 100 years would never have been successfully commercialized or approved. That includes aspirin, by the way.

Posted by: Reason at January 5th, 2007 7:35 PM

"I, for one, will take the modern, western medicine as regulated by FDA/EMEA (the European FDA) over this stuff any day."

Well you can have it.
The only law needed is one to prevent someone from claiming he meets your regulatory standards when he doesn't.
Regulation/certification could be performed by a professional/trade private organisation as well.

Or a patient could follow the "illegal" tamale/taco truck rule-go to one that has been there fo a while and has a long line.

Posted by: Bill at January 5th, 2007 7:44 PM

Re: "...eat your lunch out from under you..." What sort of person sits on his lunch? And what sort of person would want to eat it?

Cheers.

Posted by: Neil Ferguson at January 6th, 2007 7:03 AM

I have a simple question that nobody seems to be able to answer, which I find very disturbing.

Why is a night in a hospital so expensive?

I spent a night in a hospital for observation, with a battery of tests being conducted, and the hospital sent me a bill for $ 8,500. The insurance company talked them down to about $2,800.

That seems like a lot for one night. I wasn't in intensive care but spent maybe an hour attached to some pretty fancy machines like the x-ray and sonar imaging unit. If one of those machines cost US$1m and I had use of it for an hour, and the machine lasts a decade, then its time might be worth $35 an hour. I was charged $1,200 for one of the tests. Even if adding the tester and some extra for overhead, I only get $100 or so an hour. That seems like more than 10x markup to me.

Furthermore, "semi-private" accomodations are distinctly inferior to Motel 6 at $40 a night, and monitoring tasks are one nurse for every ten or so monitors. Maybe it's worth $100 a night for that but not the $680 I was charged.

I had less than an hour's time with doctors, whose time seems to be rationed in one-minute increments. Round that up to an hour, and bill me $200 for that and it's OK.

So we have maybe $100 for a bunch of tests, $100 a night for the room and $200 for seeing an hour's worth of doctors and we get $500. Add a few dollars (it wasn't expensive, even on the bill) for blood tests and supplies and let's say it's $600.

Where did the other $2,200 go?

I want to opt out of this system. Frankly, I'd rather die on the street than have medical bills that would leave me in misery and poverty forever. Medical insurance is just a way to pay for this over my life instead of all at once. I think it would be better if people had to pay their own medical bills instead of having insurance - we'd have costs go down to reasonable levels in nothing flat.

I don't want medical insurance. I want a system that's affordable without insurance. And I didn't see anything gold-plated about how I was treated and so I really want to know where all the money goes.

Many thanks for any explanation of this. I have asked three different medical professionals and none of them have a clue. Aren't people at least curious about this?

D

Posted by: David H Dennis at January 6th, 2007 7:52 AM

Tracing out costs in a hospital is a difficult task at best; but a huge part of the costs come down to at least three things --

1) for equiptment, which is far, far more expensive than it seems it should be just because it is medical -- for example, so much of the equiptment is sterile -- so a pair of sterile latex gloves that seems as though they should cost a penny to make costs 40 dollars because they are sterile, medical equiptment -- alot of this is regulatory and a fair bit has to do with liability -- if a company says that a pair of gloves is bacteria free, they had better be right in a hospital.

2) the tests you had are expensive, not because of the time of those administering the tests, but because of the responsibility of those reading the tests for giving results. If you had a chest Xray, the cost isn't high because of the cost of running the machine itself or the xray tech administering it but for the radiologist who looks at it and says "I don't see anything wrong here" -- tests are worthless without interpretation -- but this comes at a cost, and physicians pay high insurance premiums because they aren't perfect at this skill. This all gets passed on to the consumer

3) most importantly, there is a huge, huge administrative cost of medicine to be incompliance with the laws of the land. This covers everything from the labeling of lab specimens with computer tracking systems to ensure that the proper tests go with the proper patients to the high cost of the billing system; a huge part of healthcare dollars is spent ensuring that everything that happens is precisely recorded in such a way that insurance companies will reimburse hospitals for the services they provide. For your X-ray example, the hospital can only get paid for the x-ray if you have a diagnosis/symptoms that can get paid for an x-ray and that symptom is properly documented in the chart, and in the order for the x-ray -- which for a single test sounds easy enough. But every single action in the hospital is subject to this type of review and legions of people are employed just to review charts -- If the hospital bills too much, or too little it is considered fraud.

This is all pretty crappy, because your assessment is more in line with what it seems like would be fair to be charged if you could just remove all the regulations from medicine. but to be in HIPPA and JHACO compliance hospitals have to follow some pretty insane regulations --

Posted by: Mark at January 6th, 2007 10:40 AM

Read I believe the 6th chapter in Milt Friedman`s Capitalism & Freedom. He, even in the 1960s I think it was, discussed why medical care is more expensive and worse than it should be. I`ll give you a hint: When a group of people (e.g. doctors, pharmacies) promotes a law that it says "protects" you the customer, and at the same time COINCIDENTALLY helps them avoid competition, don`t touch them with a ten-foot pole. Hopefully faster transportation will end the need to pay more for less.

Posted by: Georg at January 8th, 2007 9:13 AM

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