Just What the Doctor Ordered? Israeli Medical Tourism Makes a More-than-healthy Profit

Hospitals earned $140 million from overseas patients in 2012.

Income from medical tourism increased sharply in the past two years to reach about $140 million in 2012, according to data collected by the Health Ministry and the nongovernment organization Hatzlaha.

The public hospitals took in NIS 291 million from medical tourism last year. In addition, the health maintenance organization Clalit reported that its 10 hospitals had revenues of NIS 70 million from medical tourism in 2012. Hadassah University Hospital in Jerusalem had revenues totaling NIS 108 million.

Private hospitals, including Assuta in north Tel Aviv, also had sizeable revenue from medical tourism but refused to provide numbers.

A rough estimate indicates that, in total, Israel’s hospitals had revenues of more than half a billion shekels from medical tourism last year.

The public hospital with the highest medical tourism revenues was Sheba Medical Center, Tel Hashomer, with NIS 130 million a year – up nearly 70% since 2010. It was followed by Ichilov Hospital, Tel Aviv, which had revenues of NIS 99 million (up 44% since 2010), and then Beilinson Hospital, Petah Tikva, at NIS 39 million – a full 490% increase over the figure from 2010.

Other public hospitals with medical tourism revenue were Rambam in Haifa, with NIS 36.4 million in revenues; Assaf Harofeh Hospital, Tzrifin, at NIS 15.9 million; and Schneider Children’s Medical Center, with NIS 13.6 million.

A subcommittee of Health Minister Yael German’s panel for reinforcing the country’s public-health system is currently meeting in an attempt to regulate medical tourism, which has been ongoing for the past few years with nearly no government oversight or standards. The committee is headed by Prof. Eugene Kandel, head of the National Economic Forum in the Prime Minister’s Office.

Over the past several years, multiple attempts have been made to set standards and regulations for medical tourism. In May, Yael German's committee determined that medical tourism should account for no more than 10% of a hospital’s revenues from operations. But the panel is yet to submit its recommendations, so this limit is not yet official.

Medical tourism is one of the more sensitive issues for Israel’s health system. Every medical tourist admitted raises the question of whether that person is taking the place of an Israeli patient, particularly given that the hospitals are notoriously overcrowded and the wait for treatment is long.

Medical tourists - who come primarily from the former Soviet Union and from Mediterranean nations - visit for a fixed duration, and therefore receive expedited treatment, meaning they get to skip waits that Israelis face.

As far as hospitals are concerned, medical tourists are particularly attractive and lucrative patients. Hospitals charge them much more than they receive from Israeli patients, particularly given that hospitals give discounts to the local HMOs.

In addition, unlike HMOs the medical tourists pay the hospitals immediately, and in cash. The money goes into the hospitals’ parallel business operations, as opposed to the budget subject to government oversight, which means the hospital directors have more control over the money.

This is the first time full data on the Clalit hospitals’ medical-tourism revenue is being revealed. According to data Clalit gave Hatzlaha under the Freedom of Information Law, its hospitals received NIS 70 million in revenue from medical tourism in 2012 – a small sum compared to the revenues of public hospitals. Beilinson treated 1,143 medical tourists last year, taking in a total of NIS 39 million – significantly less than nearby state hospitals Ichilov and Tel Hashomer.

The public hospitals refused to give data on the number of medical tourists they treated. Clalit, however, gave precise data, indicating that while the number of medical tourists increased 40% between 2010 and 2012 - to 2,336, up from 1,649 - revenues were up 440% (from NIS 15.7 million in 2010). This indicates that Clalit’s hospitals are increasingly screening potential customers based on their potential as revenue sources.

Clalit CEO Eli Depes said the increase in medical tourism at Beilinson stemmed from the fact that the hospital itself became capable of taking in more patients. He noted that Clalit is conscientious about limiting the phenomenon. “We could fill Beilinson with patients who would generate NIS 80 million,” he said, adding that the HMO felt bringing in any more patients would harm the treatment given to Israelis.

“We’re stopping ourselves, even though it’s tempting because the marginal profit from every tourist is high," Depes added. "There’s a limit to what I as CEO can do – earn another NIS 20 million but hurt patients? That’s a red line.”

No authority in Israel has full data on medical tourism here. The Health Ministry has only partial data that includes the state hospitals’ revenue. It does not know how many patients are treated, or in which departments.

Clalit is its own manager regarding its hospitals, and had not previously been required to give data on this matter to the Health Ministry.

A spokesman for Assuta told TheMarker it would not be handing over any data on the matter. When Hatzlaha tried to receive more complete data from public hospitals under the Freedom of Information Law, it hit a wall – only Assaf Harofeh provided full answers to all the questions, including how long tourists wait relative to Israelis.

Sheba declined to respond to Hatzlaha’s request for information, while Ichilov answered via its lawyers that the number of medical tourists is a “corporate secret.”

The phenomenon has raised red flags for some. “The increasing growth in the medical tourism industry is reason for concern,” says attorney Elad Mann, legal adviser to Hatzlaha. “This is an industry with no oversight or standards of what’s permitted or forbidden.”

Ofer Vaknin
Haaretz