Medical Tourism: Protecting Patients from Conflicts of Interest in Broker's Fees Paid by Foreign Providers

Abstract

Medical tourism is a viable option for patients who can’t obtain care in the U.S. at a price they are able or willing to pay. Medical tourism companies provide valuable advertising, screening, and matching services when bringing together such patients and foreign providers and ancillary companies in a multiplicity of venues offering various packages of services. These services are often paid for by undisclosed broker’s fees disbursed by the foreign medical providers. Such fees would be considered illegal and unethical referral fees were they to involve physicians and domestic care. There is no firm theoretical or empirical foundation for the domestic ban and existing mechanisms in both the domestic and medical tourism settings serve as checks on abuses argued to be associated with referral or broker’s fees. The unsubstantiated reasons underlying the domestic ban, moreover, have less force when applied to the medical tourism context. A legislative ban – or any formal legislative controls – on broker’s fees could only practicably be enforced against U.S.-based companies, and could put them out of business or force them to relocate outside the U.S. Nevertheless, patients have a right to know about broker’s fees, and market failure probably explains why there is currently little knowledge about the existence and magnitude of broker’s fees. Disclosure of the fact and amount of broker’s fees should therefore be encouraged by guidelines of professional bodies to encourage competition and enable patients to bargain with medical tourism companies and foreign medical providers. This would likely enhance rather than undercut patient trust.

Keywords: medical tourism, broker's fees, disclosure, conflicts of interest, functions of broker's fees, domestic prohibitions on referral fees to or among physicians, patient trust

JEL Classification: K2