Globalization & Healthcare

The following article was published in a small local paper nearly three years ago. At that time I suggested that healthcare would be subject to offshore outsourcing. It is now coming to pass and insurance companies are actively looking at this alternative to control costs.

With the current debates about healthcare, education, and the environment I thought it would be useful to revisit a three year old editorial.

Here are links to recent articles about Medical Tourism:

http://www.eturbonews.com/10910/medical-tourism-outsourcing-health-care
http://www.cio.com/article/499827/Offshore_Outsourcing_Sending_Healthcare_Overseas
http://abcnews.go.com/Travel/wireStory?id=6240372
http://www.oregonlive.com/travel/index.ssf/2009/08/medical_tourism_becomes_an_ant.html

-------------------------------------------------

Mom and Dad, How’s the Curry?


I have a picture in my office that is an apt metaphor for competing in a global economy. It is of a male lion lying down in the foreground and a gazelle standing in the background. The text under the picture reads, “Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed… Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death. It doesn’t matter if you are a lion or gazelle. When the sun comes up, you’d better be running.”

There is a lot written in the press about globalization usually framed as a polarized vision of it being good for large companies and bad for workers. As with most issues, the truth lies somewhere in the middle.

Globalization has been characterized a race to the bottom when in fact it is a very intense race to the top. Articles on the export of manufacturing and service jobs being lost to offshore competition appeals to our fears even though the loss of jobs is a very small percentage of the overall workforce. We cannot ignore this reality but fear-based responses are nearly always counterproductive. There is in fact opportunity IF we respond aggressively and productively.

We have all heard of the offshoring of jobs that involve repetitive process that can be clearly documented and executed anywhere. We tend to think of “low end” types of work but technology is enabling more and more high-skill jobs to be performed remotely such as reading x-rays and MRIs in India. Medical cost are driving insurance companies begin encouraging their insured to have operations in Europe as they have high quality medical facilities at much lower costs.

The fact is that production will flow to the area that can deliver the “product” at a sufficiently high level of quality at the lowest cost. You may think that areas where services must be performed “in person” such as in nursing homes as being immune from this trend but think again. As healthcare costs continue to rise in the United States, there may be a time when it is economically advantageous to send Mom and Dad to a very comfortable nursing home in India with doctors and nurses trained in the U.S. and a staffing level that allows care workers to dote on their every need. Mom and Dad, I hope you develop a taste for curry. Sorry about the monsoons, just pretend you’re in Seattle.

By now we have probably all accepted the fact that when we call a company to place a reservation, get help with computer problems, or resolve billing problems we will be talking to someone in India. While we may cringe at the prospect of having to deal with accents we find difficult to understand, the task at hand is usually successfully concluded (eventually) and even in the face of our frustration the person helping us is always impeccably polite. In the U.S. this work is minimum wage and unlikely to support a family, but in India this is a sought after job that pays a high (relative) wage and attracts educated and ambitious young people. The offshore companies creating these jobs gain valuable experience running large telecommunications systems and designing and securing complex data centers. Taken in its entirety, this is not the minimum-wage, low-tech, low-skill operation it appears. Moreover, these companies are continuously seeking to leverage their experience to take on more complex operations. This is in turn encouraged through government policies that emphasize technology and education.

Make no mistake, today’s offshore companies are not content to just do the “low end” work we don’t want to handle ourselves. Tomorrow they will be capable of doing what we (still) do here today. Unless we have the capacity to continually create the technologies and jobs of the future the offshore companies will assume this leadership role leaving us with neither the capabilities to invent the future nor the cost structure to compete in what has passed us by.

We in the U.S. are not entitled to global leadership. We must earn this position every day. This will not be accomplished by trade or industry protection but rather with policies that encourage research and development, affordable higher education in science and engineering, and immigration policies that encourage the world’s best and brightest to come to the U.S. and help create the future here.

Currently, we attract the best and brightest students from all over the world, educate them in our finest colleges and universities, and then force them to leave the country. Increasingly, due to policies put in place post 9/11 these students are choosing to attend fine educational institutions in countries other than the U.S. This further exacerbates the problem depriving us of their valuable research and post-graduate work that would have otherwise been done here, not to mention going on to start the next eBay, Google, or Intel in some other country. It should also be noted that our best students also have these options and are increasingly taking advantage of them.

We need diversity and we need college education to be affordable for all our citizens. We also must assure that our high-school graduates are prepared to immediately undertake demanding college-level work. While in Minnesota we may compare favorably with other states (although recently we slipped seven places) we must recognize that we are competing with countries like India, China, and Finland and not Arkansas, Mississippi, or California

Our national security is preserved only if our economic security is assured. Even military strength cannot be sustained without the capabilities required to preserve economic security. This security will not be sustained in a country with our current high-school drop out rate, where graduates need remedial training before attending college, and where there is a lack of emphasis on science and engineering needed to create our future and assure our security.

There is no cause to act out of fear, but there are reasons for considerable concern. Our leadership position and security are ours to lose. Affordable, high quality college education and prepared students are the best investment we can make in our future security and prosperity. We must retreat from polarized, fear-induced positions to study, understand, and respond with comprehensive and cohesive public and private initiatives to the challenges of living in a global economy.

In a race to the top we must be the ones raising the bar. We face a real and growing challenge. As Americans we have always risen to the challenge. It is time to unite and rise again.