US Healthcare and Offshore Investment
Sep 11th, 2008 by Kevin
Growing up in Canada under a socialized health care system and now residing in the United states under a system with private insurance companies, I can see the pros and cons of each system. Neither is perfect and like most systems there is always room for improvement.
However, one misconception held by many US citizens (45 % in a recent survey) is that the US health care system is the best in the world. Sadly it is not even close. For example out of 220 countries surveyed (CIA world Factbook), The US is 42nd in terms of infant mortality. Even Cuba has a slightly lower mortality rate than the US. Further, although this country has the most expensive health care in the world, based on an ongoing National scorecard on High Performance Health systems (The commonwealth fund), the US ranks among the lowest of industrialized nations and actually falling in its score from 2 years ago.
On the other hand health care in developing countries is getting better with access to better equipment, education, and government funding. For example in Mexico government funded healthcare costs less than $300/year including all your medications at no extra cost.
Furthermore, in a recent article, according to Mexican news sources, Carlos Slim, Mexican business magnate and second-richest man on the planet, is planning a system of high-quality hospitals in Mexico specifically to cater to U.S. baby boomers. One of Slim’s companies, Ideal, has purchased a 49% stake in Grupo Star Medica, a Mexican national hospital chain.
It’s hard to blame smart Mexican businessmen for capitalizing on such an obvious opportunity. If the United States hadn’t let its health care system get so bloated and profit-hungry that 40 million Americans can’t even afford health insurance, there wouldn’t be a need to outsource it.
In addition, now numerous countries are beginning to capitalize on the health care issues of the US. Many Americans are already saving 1000’s of dollars by Medical Tourism. The concept of traveling for medical care is nothing new, but the modern concept of medical tourism—traveling to foreign countries specifically for lower cost of care—has only emerged in the past 10 to 15 years. According to David E. Williams, cofounder and principal of MedPharma partners, and author of HealthBusinessBlog.com, “in a mainstream way it’s really only started to take off in the past year or two,” because more people are traveling around the world more than they were ten years ago, and because the Internet has made long-distance communication more practical. (In time, this will also drive prices down in the US through global competitive pressures)
Ultimately this comes down to innovation and innovative thinking. On another blog I wrote about Innovation and Eliminating a Customer Sacrifice that also centers around the broken US health care system. In it I summarized a superb article by Booz & Company on the Innovation Sandbox (free registration required). The article talks about creating breakthrough innovations in developing countries by using a concept called cultivating constraints that starts with the identification of the following conditions:
- The innovation must result in a product or service of world-class quality.
- The innovation must achieve a significant price reduction — at least 90 percent off the cost of a comparable product or service in the West.
- The innovation must be scalable: It must be able to be produced, marketed, and used in many locales and circumstances.
- The innovation must be affordable at the bottom of the economic pyramid, reaching people with the lowest levels of income in any given society.
As an entrepreneur thinking about the health care problem and not only the opportunity of offshore healthcare but the derivative opportunities it can provide in areas such as real estate it sets my head spinning.
What does all this mean?
For the Retiree
- If you are looking to retire abroad, the risk of quality health care is becoming less and less an issue. It has always been affordable, now you will the quality you expect as well.
For the foreign investor?
- In the article linked above on medical tourism it was summed up the following way: “Foreign real estate investors might be interested to know that the impact on medical tourism destination economies should be “very positive,”. Popular medical tourist destinations include developing countries such as India, the Phillipines and South and Central American countries, as well as fairly developed countries, such as Singapore and South Korea.”
For the Entrepreneurial business person?
Opportunity only bounded by your own mind.
