Innovation Abroad

In this global era, outsourcing of manufacturing and servicesfrom high-cost countries to developing nations seems almostroutine. Now, not even health care is immune—as we knowfrom the small but growing phenomenon called "medical tourism."

In an increasingly typical scenario, a patient travels fromthe United States to a high-quality hospital in New Delhi orBangkok for heart surgery—where it’s performed bya skilled physician, who probably trained in the United States,for a fraction of the standard American price. The combinationof cut-rate pricing and generally good clinical outcomes hascaught the attention of major U.S. health insurers and healthsystems. Some are now considering sending patients abroad forcare, and have even gone so far as to visit specific Indianand Thai institutions and certify that they could deliver high-qualitycare.

Although cheaper foreign labor explains some of the cost savingsavailable abroad, that isn’t the whole story. In the paperthat follows, Barak Richman, Krishna Udayakumar, Will Mitchell,and Kevin Schulman of Duke University focus on Indian cardiachospitals and the ways in which they constantly innovate toreduce costs and improve care. These include adopting cutting-edgeleadership practices, novel pricing structures, supply-chainmanagement techniques, and various quality improvement efforts.

So if countries like India can do it, why not the United States?The authors try to answer this question by analyzing how structural,regulatory, and legal barriers in the United States keep thehealth sector from pursuing the types of innovations that havenow been "outsourced" abroad. The question that remains is whetherthere’s any way to reimport these back to the United States—orwhether "exporting" patients will be the increasingly more viablealternative.

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Innovation Abroad