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Going Under Down Under: New Zealand's Latest Tourist Attraction — Cheap Surgery
The Washington Diplomat / August 2008

By Larry Luxner

Would you fly halfway around the world to have your gall bladder removed?

An enterprising doctor in Auckland is betting the answer is yes — especially if you get a free vacation out of it and your insurance company picks up most of the tab.

Dr. Edward Watson is chairman and founder of Medtral New Zealand, a startup medical services provider that offers breast enlargements, total hip-joint replacements and other common fertility, urological, cardiac and plastic reconstructive surgeries at a 60% to 70% savings over the cost of similar procedures in the United States — even after throwing in transpacific airfare, hotels and meals.

"What we offer is world-class treatment in New Zealand for non-acute surgery that is as good as, if not better, than what's available in the U.S., at a price we think is pretty competitive," Watson told the Washington Diplomat in a phone interview from Auckland.

In recent years, many countries have jumped on the medical tourism bandwagon. India, Singapore, Brazil, Cuba, Germany, Belgium and the Dominican Republic all have programs in place to lure prospective patients with cash.

But New Zealand — a 12-hour flight from Los Angeles — says it can do the job better, safer and for a lot less money.

"New Zealand is not only one of the most affordable destinations for medical care, but it is also clean, green, American and Canadian friendly with a safe, peaceful environment," said Watson, an obstetrician/gynecologist specializing in family medicine. "It also offers extraordinary tourism opportunities, including stunning scenery, winery tours, golf and fly fishing. Our team of medically focused professionals is ready to assist patients with personalized attention that helps to guide their medical travel experience."

Watson, quoting a recent survey, said 40% of Americans would travel overseas if the quality of medical care was comparable to what they'd receive at home, and if the price was at least 50% lower.

"New Zealand won't be a foreign experience for medical travelers," he said. "We are an English-speaking country with a culture that is very similar to the United States and Canada. Our facilities are accredited by the recognized and respected International Society for Quality in Healthcare, but the price tag is a fraction of the cost in North America."

For example, a mitral heart valve replacement that costs $120,000 if done in the United States is under $40,000 in New Zealand. Watson says he can perform a hip replacement for $24,000, compared to the U.S. price of $75,000.

Other costs for common sugeries: radical hysterectomy, $19,000 (U.S. price: $60,000); robotic prostate, $25,000 to $30,000 (U.S. price: over $100,000); coronary artery bypass graft surgery, $38,000 (U.S. price: $125,000).

"There's no point in us quoting prices without everything included," he said. "Our price is all-inclusive, meaning round-trip airfare on Air New Zealand, accommodations and the procedure itself. Other medical travel organizations operating in a first world environment would be hard-pressed to match this package."

He added: "At the moment, we're using two Auckland-area hospitals [Mercy Hospital in Epsom and Ascot Hospital in Remuera], and we're looking at adding a third hospital in Christchurch, on the South Island.

According to the New York-based Commonwealth Fund, New Zealand has one of the world's best health systems. The country's private hospitals rival the finest in the world, with all facilities staffed by experienced doctors and nurses who — in many cases — have been trained in the United States or Great Britain.

Watson said he got the idea for Medtral while working for pharmaceutical giant Pfizer in New York, and later Schering-Plough in New Jersey.

"We were doing clinical trials of new drugs, and it dawned on me that the price in the U.S. versus what we could do it for in New Zealand was huge, and the outcome and the data were exactly the same," he told the Diplomat."And I thought, if that's true for clinical trials, it must be true for the medical procedures as well. So I looked at price differentials, and saw that in California, for example, the cost per bed night was approaching $2,000, while in New Zealand it's probably around $400."

That's because New Zealand, with 6.2 hospital beds per 1,000 inhabitants, has extra capacity and lower costs to begin with. The country also has strict hygiene control standards in all its hospitals, as well as strict enforcement of the appropriate use of antibiotics, so the rates of hospital-acquired infections remain low. Just in case, Medtral offers contingency insurance at no extra charge, to cover the small risk that something goes wrong.

"New Zealand has been treating overseas visitors for 10 years now, but it hasn't really been a focused effort," said Watson. "We've been up and running since last September. So far, we've got two dozen registered patients in the process. Patients have all their diagnostics and pre-screening done ahead of time, so once they come to New Zealand, we know what's wrong with them."

Watson cautions that Medtral's service isn't for everyone.

"We're not offering a blanket invitation to every patient requiring surgery to come to New Zealand" — only for those whose conditions are stable enough to allow them to travel. In addition, patients must be at least 18 years old.

Watson said he expects to be treating 2,000 foreigners annually by 2013, generating hundreds of millions of dollars for his country, and creating a new industry in the process.

"If it grows as expected, it will bring investment into the New Zealand medical system and allow our surgeons to keep up-to-date and broaden our client base," he said. "We think this will be profitable reasonably quickly. With such a large discrepancy in pricing, we're not after a huge market share. We're positioning ourselves as a boutique medical travel destination suitable for those patients who want the environment we offer and at a price we think is affordable."

Watson said his company offers top-notch specialists, many of whom have trained in such prestigious U.S. institutions as Massachusetts General Hospital, the Arizona Institute for Bone & Joint Disorders in Phoenix, and New York's Memorial Sloan-Kettering Cancer Center. The company is in talks with several large insurance firms as well.

In late June, Medtral announced it had signed a deal with Pinnacle Health, a Boston-area PPO offering health-care services to self-funded employers, with over 3,000 providers in Northeastern states.

"This relationship holds significant potential for both organizations," said Pinnacle's president and CEO, Paul Brough. "An attractive destination for medical care and surgery, New Zealand pushes all the right buttons for me. The quality and affordability of the travel and treatment packages is unparalleled. Our customers are now requesting options for medical travel, and New Zealand fits the bill." 

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