One Company With an Eye on U.S. Customers

By Eleanor Black Watkin
Special to The Washington Post
Tuesday, July 8, 2008

AUCKLAND, NEW ZEALAND -- Being a cautious man, Eugene Horn of Willamina, Ore., did his research when it became apparent that he needed both knees replaced.

Years of football had taken their toll, and a fall through rotten flooring while demolishing a house capped it. His knees were shot. Horn talked to friends and family, discussed options with his family doctor of 20 years and spent hours online comparing costs and learning about knee prosthetics. Then he made an unexpected choice: Next month, the 69-year-old Anglican priest will travel down under to have both knees replaced in New Zealand -- at a bargain-basement price.

Better known for its awe-inspiring scenery and for offering tourists the opportunity to risk life and limb jumping off tall buildings in the name of adventure, New Zealand also has fine private hospitals that, unlike their public counterparts, are not full to overflowing. But the major advantage, and the biggest selling point for Medtral, a New Zealand company set up to attract refugees from the U.S. health-care system, is cost: The company says it can offer procedures at boutique hospitals with follow-up personal nursing care at a fraction of the cost of the same surgery in the United States. And with an English-speaking hospital staff and a culture that feels familiar to many Americans, Medtral aims to make New Zealand a destination of choice for some of the growing number of medical tourists -- Americans who travel overseas for health care.

"It would be much better if the U.S. medical system had not been in the process of spinning out of control for a good number of years now," says Horn of his decision to travel 7,000 miles for surgery, which troubled his family until he reassured them that New Zealand's hospital care is as good as "if not better" than what he could access at home.

That kind of thinking is exactly what Medtral's creator is banking on.

Edward Watson, a New Zealand OB-GYN who has been highly successful as a consultant for pharmaceutical firms including Pfizer and Pharmacia, observed the comparatively low cost of conducting drug trials in New Zealand and realized that the same would probably be true of major non-urgent surgical procedures.

Exact comparisons are hard to make because of the great variability in pricing in the United States and in the costs of traveling abroad with a companion, for example. But according to Arnold Milstein, chief physician at Mercer Health and Benefits, the cost of replacing one knee using the rate negotiated for a PPO-style insurance plan, with additional expenses for aftercare, would be about $32,000 in the United States, compared with about $18,000 at a top-tier hospital in Mexico and about $22,500 in New Zealand. Coronary bypass surgery would be $61,500 in the United States, $22,000 in Mexico's top tier and $34,000 in New Zealand. Those foreign hospital prices include hotel, airfare for two and case coordination by a registered nurse; any uninsured American without U.S. insurer-negotiated discounts would face far higher U.S. hospital bills.

Watson reasoned that this would appeal not only to the estimated 75 million uninsured and under-insured Americans, but also to insurance companies eager to keep their costs down. "They are interested in working with us," says Watson of several major insurers to whom he said he has made presentations.

Twenty-nine Americans and one Canadian have registered with Medtral since the company's Web site was launched in September, Watson says, and Eugene Horn will be one of the first to use the company's services. After he and his wife, Diane, fly to Auckland in late August, he will check in to a private room with its own bathroom and a large window. After he is discharged, a nurse will visit him in his hotel.

Sweetening the deal is the opportunity to see something of a country celebrated for its natural beauty and relative calm (the size of Colorado, New Zealand has a population of just 4 million), although for Horn that was "a minor part of the decision."

Even though he has Medicare coverage, Horn says that his right leg, which was injured in his fall, presents particular challenges. He's attracted by the promise that a New Zealand surgeon will choose whatever prosthesis seems best for him, rather than being limited by arrangements he understands U.S. surgeons have with certain manufacturers.

"Our focus is more on procedure than on people wanting to come to New Zealand for a nice holiday," Watson says. Nevertheless, Air New Zealand, a partner in Medtral, will arrange travel packages to and within the country, and Medtral's promotional literature extols the country's "vast mountain chains, steaming volcanoes, sweeping coastlines, deeply indented fiords and lush rain forests."

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