The only way Bridget Flanagan, a 21-year-old college student from Olympia, Washington, could afford the obesity surgery she needed was to go to Mexico. Her health insurance didn’t cover the treatment.
Traveling 2,000 miles for gastric banding surgery at Hospital San Jose in Monterrey, Mexico, saved her $6,600, making it affordable. The procedure was a success, allowing five-foot- tall Bridget to drop 45 pounds so far off her peak weight of 275.
Health-care companies and investors see a new market in patients like Flanagan. Tecnologico de Monterrey, the private university that owns San Jose Hospital, plans a $100 million medical center in Monterrey. Grupo Star Medica, the builder of seven Mexican centers in five years, is accelerating an expansion aimed at Americans, funded partly by billionaire Carlos Slim.
“This is a great opportunity not only for Mexico, but also to reduce health costs in the U.S.,” said Marco Antonio Slim Domit, Carlos Slim’s son and chief executive officer of his Mexico City brokerage Grupo Financiero Inbursa SAB. The firm took an undisclosed stake in Star Medica, a privately held hospital chain based in Morelia, Michoacan, in southern Mexico.
While Mexican authorities declined to estimate how much the country’s health-care industry is expanding to handle medical tourism, companies are building new hospitals, clinics and surgical centers.
U.S.-based companies are also investing in Mexico. Christus Health, a nonprofit based in Irving, Texas, owns six hospitals in Mexico after opening one in Reynosa near McAllen, Texas. Dallas-based International Hospital Corp., the operator of three hospitals in Mexico, is building a fourth in the central city of Puebla.
Grupo Empresarial Los Angeles, Mexico’s largest private hospital chain, is spending $700 million to build 15 hospitals over the next three years, said Victor Ramirez, the chief operating officer of the company’s hospital unit. Oca Hospital, a family-owned company in Monterrey, is building a 200-bed facility there.
“In diverse cities that are attractive to Americans, we can offer hospitals that are very competitive and at a very good price,” Ramirez said.
Grupo Angeles has a marketing campaign targeting Americans. The goal is for foreigners to make up 20 percent of patients within two years, up from 5 percent now, Ramirez said. At the company’s hospital in Tijuana, Americans accounted for 40 percent of the 100,000 patients the facility admitted in 2007, he said.
Health spending in Mexico in 2005 was about $49 billion, or 6.4 percent of gross domestic product. In the U.S., the world’s biggest economy with a population almost three times Mexico’s, health-care spending reached $2.2 trillion last year, 16 percent of all goods and services.
The number of private hospital beds in Mexico rose 28 percent to 34,576 in 2005 from 27,015 in 2000, according to the census bureau. Private doctors more than doubled to 55,173 from 21,565 during the same period. Surgery rooms in private hospitals jumped 46 percent to 4,545 in 2005 from 3,115 in 2000.
U.S. employers are prodding insurance companies to lower costs by providing incentives for workers to travel abroad for treatment. About 47 million Americans lack health insurance altogether.
For decades Mexico has attracted U.S. residents looking for cheap, basic health care. Border cities such as Tijuana and Ciudad Juarez across from El Paso, Texas, are dotted with clinics hawking bargain dental braces or discount eye exams and pharmacies that sell prescription medicines over the counter.
Beyond Cut-Rate Care
Medical tourism is expanding beyond cut-rate care, said Arturo Garza, who runs the Mexican unit of Christus Health. Mexican hospitals now perform hip replacements, spinal fusions, knee surgery and angioplasty. The U.S. cost of such procedures encourages people sometimes to forego treatment or leave the country for it, said Peter Maddox, 60, a senior vice president at Christus Health.
A hip replacement in Mexico costs $12,000, compared with $43,000 to $63,000 in the U.S., according to a study by Christus Health published last year. Angioplasty, in which a surgeon uses a tiny balloon to open a blocked coronary artery, costs $10,000 in Mexico, compared with $57,000 to $82,000 at an American hospital.
Star Medica in September opened a 53-bed facility in Ciudad Juarez and plans others in Tijuana and Mexicali, said Fernando Padilla, medical director for the hospital. The chain will target American patients for elective surgery such as arthroscopy and laparoscopy.
“This is something that will grow very rapidly because it makes sense,” Garza said.
Christus is putting its seventh Mexican hospital in Reynosa, across the border from McAllen, Texas, to attract U.S. patients. It’s also adding a $100 million heart surgery center to the Monterrey unit where Flanagan had her procedure.
Flanagan, resting in a private room at San Jose Hospital, said the cost for placing a band around her stomach to reduce its size was $10,600 in Monterrey plus $600 for round-trip airfare. She would have spent $17,800 at Northwest Weight Loss Surgery in Everett, Washington, a clinic that specializes in the procedure.
Salaries for American doctors and nurses, often 10 times as much as in emerging-market countries, are the main reason for higher medical costs, said Paul Mango, a Pittsburgh-based partner with McKinsey & Co. who leads the firm’s global health- care practice.
Flanagan’s parents, who have their own law firm, provide health care for the family with a $300-a-month catastrophic insurance policy with LifeWise Health Insurance. The policy carries a $3,500 deductible and excludes benefits for obesity such as gastric banding surgery.
Apart from the cost savings, Flanagan was attracted to the level of care and support in a full-service hospital, which a clinic can’t match. She met with four doctors in Monterrey, including chief surgeon Roberto Rumbaut, who explained the procedure in detail. Rumbaut studied under Dr. Franco Favretti, an Italian doctor credited with helping develop laparoscopic gastric banding, and says he has performed the procedure more than 4,300 times.
“The doctors talked to me as long as I wanted,” said Flanagan, a student at Evergreen State College in Olympia. “My impression is that the doctors here do things more on a personal basis.”
Surgeons at San Jose operate on about two foreigners a day, and the hospital has a dedicated customer-service office for them, said Ernesto Dieck, the chief executive officer. More than 90 percent of the doctors at the facility — which has performed heart transplants — have worked at U.S. or European hospitals, he said.
“We have the experience,” Dieck said. “The borders between Mexico and the U.S. and Canada in terms of medicine will fall over the medium term.”
As Mexico’s private hospitals have improved, they’ve attracted more patients, including wealthy Mexicans who in the past had traveled to Los Angeles, Houston and other U.S. cities for care, Dieck said.
In the race to attract medical tourists, Mexico has lagged behind other developing countries such as India, Thailand, Singapore and Brazil. The Joint Commission, an independent, nonprofit group based in Oakbrook Terrace, Illinois, evaluates and certifies health-care organizations around the world that meet a set of quantifiable standards. The commission determined that 11 hospitals in Singapore met its standards of care, as did nine in Brazil while Mexico has only two: San Jose and Christus Muguerza Alta Especialidad, both in Monterrey.
Mexico’s advantage is its location, Dieck said. A flight from Chicago to Monterrey, 150 miles south of Laredo, Texas, takes about three hours, compared with more than 20 hours from Chicago to Bangkok.
The cultural differences between Mexico and the U.S. have lessened after more than a decade of lower trade barriers under the North American Free Trade Agreement. The cab ride from Monterrey’s airport into town takes travelers past a Marriott hotel, a Carl’s Jr. fast-food restaurant and 7-11 convenience stores.
Mexico operates a government-owned health system that provides coverage for all workers who pay taxes and their families. Many companies also pay for treatment at higher quality private hospitals.
Slim’s Inbursa is financing Star Medica’s expansion in exchange for an option to take an undisclosed stake in the company, Slim Domit said. Inbursa considers Star Medica a financial investment and doesn’t plan to operate the hospital chain, he said.
Slim said he would like to see the U.S. government extend its Medicare and Medicaid benefits to U.S. citizens who retire in Mexico. Although U.S. government officials say the idea isn’t under consideration, investors like Slim are hopeful.
“It would create a lot of jobs in Mexico,” Slim said. “That would be fantastic.”