Interview with GlobalChoice Healthcare's Ken Erickson (transcript)

David Williams: This is David Williams, CEO of MetripInfo.com. I spoke earlier today with Ken Erickson, CEO of GlobalChoice Healthcare. GlobalChoice isn't a medical tourism agency. It bills itself as a procedure management firm, offering employers a supplemental benefit that extends their provider network to additional US and international locations.

Ken and I spoke about his providers and customers, continuity of care, accreditation, credentialing and malpractice, among other topics.

Ken, thanks for joining me.

Ken Erickson: Thank you for the invitation.

David: Ken, what is GlobalChoice Healthcare?

Ken: GlobalChoice Healthcare is a company that was organized to fulfill the promise of medical travel. We have created a product called the GlobalChoice Health Benefit that provides access to hospitals--both in the US and internationally--and all the wrap-around services for one of our clients to access those medical facilities.

David: When you talk about wrap-around services, what sort of services are those?

Ken: The services are anything associated with the medical care, which means all of the pre-medical care, wrangling of medical records, and getting that person approved for care at the remote location. And then, all of the interrelated travel services to get them to the location, the care while they're at that location--all the logistical care while they're at that location--case management while they're there, and then integrating them back into their care system when they get back home.

David: When you talk about having a global network, I noticed that you've got facilities in very disparate locations ranging from Turkey, to Singapore, to Wisconsin, to Los Vegas, to Mexico. How did you decide where these facilities would be?

Ken: Internationally, it has to do with quality, cost, and location. We have actually worked through many, many different locations internationally. And we have really settled on those that we feel have the quality--have the JCI accreditation--and have the cost advantage. It needs to be a location that's actually somewhere that a US individual would actually feel safe, secure and it's clean. So that being the case, you'll notice that at this point, we're not in India.

David: And do you think India has potential or it's just too far in the future or just never going to be a good part of your mix?

Ken: I think that we have to take a look at our network from they eyes of a corporate VP of HR. And what that vice president of human resources would experience in getting off the airplane and getting to the facility. And how that person--because that person ultimately is responsible for the employees and that experience. So I'm not saying that it won't work and won't ever work, but at this point, breaking into the market where we are, we just made the decision not to go there.

David: So when you talk about a VP of HR, it sounds like you're targeting corporations. Are there any particular types or sizes of companies that are your target customers?

Ken: No. Our product fits any company from ten employees to two-hundred thousand, five-hundred thousand.

David: And from their standpoint, is there any difference in whether larger or smaller ones are interested or does it just depend on how enlightened or how troubled the company is?

Ken: No, it's not about being enlightened, it's not about being troubled, it's about their population within their employee group. If they have a population within their employee group where they're going to see some of these procedures: heart procedures, orthopedic procedures, back procedures; where they experience those procedures within their employee base, we with our product can help save them money on those procedures. It's not about a company who's going to be enlightened and send their people to Mexico for care. It's about a company who is experiencing cost increases in their healthcare and want to find a solution.

David: So are you able to tell from the outside which companies are going to be good candidates based on having high exposure to the sort of procedures that you cover, or is that something that the company has discovered on their own and come to you where it's a process that you work through with them together?

Ken: No, we have a full process to be able to identify that.

David: And if you have a company that's a particularly good candidate because they have lots of cardiovascular and orthopedic procedures, how much of a difference could it make for them in their overall healthcare tab if they're using the GlobalChoice benefit versus not having it?

Ken: On the overall procedures, we're seeing a 40-60% savings--on the procedures themselves. We can have up to a five percent effect on their entire healthcare cost. I mean, it's huge.

David: And the 40-60%, are you comparing that with their negotiated rates? Because often what I see in the press when people talk about 90% off, they're looking at charges in the US, and they're looking at the price in the other country without factoring in any other expenses.

Ken: Yeah, you know, Dave, I think that's a very good point. There's a lot of--I wouldn't say disinformation because I don't think anyone's trying to fool anybody, but I think that we have done a lot of work to find the real cost that people are paying here in the US and comparing that to real cost of the procedure and sending somebody for care and coming up with a real solution in terms of dollars and cents in the marketplace.

David: Would your offering also be relevant for health plans or do you see the employer as the direct customer for you?

Ken: Health plans should access our network. No question. But health plans already have their own networks within the US. So they have some additional issues to overcome. I think that they'll come around --and we're already starting to work with health plans. But for a lot of the health plans--again, that have their networks--there's a lot more credentialing work and other things that we have to do within our own network to satisfy their needs.

David: So the employers are the ones who are feeling the pain more acutely and maybe are also a little bit less fussy about all the ins and outs and steps and hoops that have to be jumped through to join the network.

Ken: Well, yeah, but I will say that we are actually providing that credentialing on our end. So we're actually doing a lot of that credentialing to hold our facilities to those so that the self-insured employer is very, very satisfied.

David: And what's your perspective on some of the, for example, the accreditation arms like JCI? What does it mean if the hospital is JCI accredited? Do you see a big difference? Are those the only hospitals that you would look at?

Ken: The JCI is very important. At the end of the day, the JCI is important because it really is the foundation for the quality standards. Now, there's a lot work we have to do from there, but still, the JCI is important.

David: And when you're offering this benefit, what's the revenue model for GlobalChoice? Who's paying directly and how do you make a profit?

Ken: First of all, what we wanted to do is get out of the middle of being a broker. We didn't want to broker healthcare. We didn't think that taking a commission or doing anything like that was right. So, I won't give you the specifics, David, but suffice to say that we actually have a program where we fit into their existing plan and there's a fee that we charge. That fee covers access to the network and all of the services to allow their employees to travel.

David: So when you described before that you fit into their existing benefit, then it's probably on a PMPM or PEPM basis as opposed to transactional.

Ken: Yeah, it's not a transactional basis.

David: What kind of reaction do you see from employees when they hear that their employer is offering the opportunity to go abroad or is requiring it?

Ken: First of all, we do not work with any plans that require it. That's just not where we want to be. This is built into a plan as an option, and strictly an option. An addition to their network. Individuals can choose to stay in their network or they can choose to travel.

David: So that would be one thing to help the employees relax a little bit, if it's just an option. How do they think about it, or how are they presented with it as an option and what's the decision making like?

Ken: We actually present the employee with their own plan, place it on the Internet where the employee can see all the quality data and see the cost benefit for making the choice to travel. But we present that to the employee.

David: And is the benefit that they're seeing the benefit to the employer or does the employer tend to share that benefit--financial benefit with the employee?

Ken: The employer needs to share that benefit with the employee.

David: When patients go abroad do you recommend that they travel alone or bring a spouse or does it depend on the situation?

Ken: All of our plans include travel with somebody.

David: How do you address the topic of continuity of care? The patient is presumably going to be cared for in the community before they travel--whether it's domestically or internationally--and then they'll need some care when they come back. How do you think of that?

Ken: We have all those protocols in place. And we require it.

David: And what's the reaction of the local physicians? Do you reach out to them, do they embrace it, do they...?

Ken: It's a non-issue.

David: Why is that? Because I sometimes hear that doctors are going to be fearful, and the AMA hasn't necessarily been very positive about care abroad for example.

Ken: We find it's a non-issue.

David: OK, so actually, at the working level, physicians are trying to do what's best for their patients and if it's something that's logical and can save money, then they go for it.

Ken: David, what we find is the doctors really care about their patients. And so at the end of the day, we found that it's really a non-issue.

David: And what about malpractice, liability, patient safety, things that are always tossed out there. I know that you're addressing that partly with the locations that you're choosing, but how do you deal with the legal structures in other countries for example?

Ken: Well, there're two ways. First of all, we have very, very tough provider agreements that require them to carry medmal insurance. So they have it. It's just like an occurrence here. The providers carry the insurance and they have it just like a provider does here. Fairly straightforward in our eyes.

David: If I look at the hospitals--and I don't know exactly how your network breaks down in terms of where procedures are done--but I know that far away places like Singapore and Thailand and India have done a lot of the cardiac and orthopedic procedures. That's an awfully long distance to travel. Having just come back from Singapore, I can attest to that personally. But you've also got facilities within the US and then Mexico. What's your feel on the ability to find these sorts of high level procedures closer to home?

Ken: Let me tell you, we're finding the best procedures in the world very, very close to home. The thing is, the ability for surgeons to access technology, to increase their capabilities is getting--the technology is more readily available every day in every part of the world. So it's not about the guys in India having access to better technology. That technology is available right next door.

I think you're going to see, very, very close to home very competitive pricing. I think it's going to have a positive effect on the finances of corporations here in America.

David: When you mentioned technology, that brought up another thought. I know that in the field of pharmaceuticals, it used to be the case that the same drug would be priced very differently around the world and there wasn't any concern about spilling over from one market into the other. Now we've had drug reimportation that's throwing the pharma companies for a loop. When you look at some of these procedures that involve devices which are fairly expensive --like heart valves or knees or hips-- to what extent is the savings driven by the same device being sold at a lower price in a developing market than the US?

Ken: I think you're right. The cost advantages in Mexico and in other countries specifically in some of the prosthetics and in the drugs will always remain. And we find that. So that's why if you can figure out a protocol for cancer care in Mexico, well, that works. But you've got to figure out a protocol. And that's the hard part. You just can't take somebody and say, "Oh, yeah, great, we're going to send you to Mexico for your cancer care." It just doesn't work. You have to have the protocol to take them out of their system, put them into another system and take them back, integrate them back into their care correctly in order to realize those savings. So simply just saying, "Hey, it's less expensive there, we're going to go." just doesn't work.

David: Well, Ken, your company's being pioneering this field of medical travel extending a provider network for employers. If you look back five years from now, what do you hope to see in terms of how the industry has evolved?

Ken: Well, what I'd like to see is I'd like to see it be an industry.

David: Fair enough.

Ken: I think that procedure management companies like ours are a great thing to help drive costs down in the US. So five years from now, I'd like to obviously see GlobalChoice as the leader and I think you will. I think it's an exciting new industry. I think that it is going to be the medical tourism world that is attracting the uninsured individual as a cottage industry and I think that's fine. But I think the industry of procedure management five years from now will be an accepted part of health plans across the US whether you're self-insured or fully insured.

David: I've been speaking today with Ken Erickson, CEO of GlobalChoice Healthcare. Ken, thanks very much for your time.

Ken: Hey, Dave, thanks a lot and I look forward to doing it again. Call me whenever you'd like to have a chat.