On January 20, 2010, General Motors Healthcare Corporation (’GMHC”), parent company of General Motors Corporation, announced the signing of an historic healthcare agreement with the Republic of Cuba, following the decision last year by; the Clinton Administration to lift all travel restrictions and sanctions against that nation located 90 miles off the coast of Florida. GMHC announced that starting March 1, 2010, all portable medical/service procedures required for its employees and retirees costing more than $2,000.00, would be performed in Cuba at the new medical spa resort located at the site of the former U.S. Naval base at Guantanamo. The base formerly known as “Gitmo,” was developed by a U.S./Cuban investment group, following the sale of the facility during the last days of the administration of George W. Bush.
The U.S investment group was led by former U.S. Senator Bill Frist and former Congressman Newt Gingrich. Comandante Elian Gonzalez, led the Cuban contingent. Dr. Rajib Ramanan, Chairman and CEO of CMHC, announced the completion of the agreement following a special GMHC Board meeting announcing the return of GMHC and its subsidiary automotive arm, GMC to financial solvency after its drastic reorganization following bankruptcy. “It took us many years here at General Motors to realize that we were primarily a health care company,” said Dr. Ramanan.
Since deciding to reorganize in 2008, as a health care company with a automobile manufacturing subsidiary, GMC and its parent, GMHC, have made huge strides in returning to profitability in all lines of their products by improving quality and squeezing out unnecessary costs to remain competitive in both quality and price in all both of its primary core businesses, healthcare and motor vehicles. During the later years of President George Bush’s presidency, GMC found itself sinking under the weight of its healthcare costs for both current and retired employees. It was unable to compete. The company decided that the only avenue to survival was to fight fire with fire and to embrace the existence of the global marketplace. GM transformed itself into a healthcare company with a focus on value.
The company stepped back and took a hard look at how its healthcare and related overhead costs had pushed it out of competition with less encumbered Japanese and Korean competitors. The first step to recovery for the company was the recognition that, like it or not, it was in the healthcare business in a big way and that if it did not improve its performance in that line of business, its manufacturing business would be history.
Following, the corporate reorganization of the company into a lean and mean healthcare company, with a vehicle producing subsidiary, GMHC began to manage its healthcare costs with a vengeance .It acquired its own primary care professional team of doctors, nurses and continuum of care managers. It developed its own insurance and managed care products. It acquired a leading PMG and the nation’s largest home health agency, Quo Vadis Healthcare. Through its PMG it negotiated substantial discounts with the major generic pharmaceutical companies. Where it could not secure adequate discounts from domestic suppliers it purchased drugs in bulk from foreign suppliers, pleased to re-import the products in bulk at deep discounts. GMHC acquisition and revamping of Mutual of Omaha’s healthcare insurance line and push into the third party administration of other companies’ self funded health insurance plans projected it almost overnight into the position of being the largest publicly owned, vertically integrated, health care company in the United States, surpassing United Healthcare. Dr. Ramanan at his news conference stated,
The real turning point for us came when we read a survey indicating that the majority of physicians and senior hospital and healthcare insurance executives drove foreign made automobiles. When we inquired into the reasons why that was so, we learned that their perception was that we couldn’t compete on either quality or price. We were stunned, but not for long.
Dr. Ramanan recounted how GMHC embarked upon a total reassessment of its healthcare program rejecting any proposition or belief that could not supported by empirical evidence.
The first two major hurdles we needed to get over were the perceived “truths” that 1)all healthcare must of necessity be local and n2) that the quality of care in third world countries was lower than that available in the united States. We asked ourselves, what if our assumptions were wrong. What if the healthcare business like the automobile business was truly global? Was there a message for us there?
Dr. Ramanan, himself a native of New Delhi, and the brain trust of global healthcare management consultants retained by GMHC determined that, while some medical and surgical procedures must be performed locally because of the inability of patients to travel, many more procedures, including joint replacements, cataract operations, hernia repairs, many cardiac procedures, varicose vein surgery,. bunionectomies, and many other procedures could be performed for less than twenty percent (20%) of the cost in the United States, even with airfare included as part of the price. Dr. Ramanan also recited statistics that underscored the large penetration of the domestic U.S.health care provider market by foreign trained physicians. Roughly twenty five percent of the roughly 900,000 physicians licensed to practice in the United Stateswere International Medical Graduates. The top eight countries supplying foreign trained physicians were all developing countries with his won birth county, India, leading the way at twenty one percent (21%). He noted that foreign medical school graduates accounted for about twenty percent (20%) of U.S. Medical School faculties.
We learned that it was possible to obtain quality healthcare at third world prices. We too should be focusing on quality and price in our acquisition of health care services in a world wide market.
The compact with Cuba was the final piece of GMHC’s global healthcare strategy. “Think about it”, said Dr. Ramanan, “Cuba has long maintained an excellent reputation for its healthcare systems.” Since the return of Casino gambling to the Guantanamo part of the island, GMHC retirees living in Florida and elsewhere are flocking to Cuba for the music, the atmosphere, the gambling, the sun, the food, the camaraderie and the healthcare. GMHC noted Dr. Ramanan acquired its own charter airline for medical tourism flights from Detroit and other rust belt cities to Guantanamo International Airport. Every attendant on the new airlines is a nurse says Dr. Ramanan. Most of them are Filipino trained in Manila. They are each ACLS and “mojito” certified.
[Note: The statistics used in this article came from Matoo and Rathindran, “How Health Insurance Inhibits Trade in Healthcare,” Health Affairs, March/April 2006, at 358-368.]
Comments