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LBJ CEO explains benefits of working with Philippines

LBJ Medical Center is looking at the Philippines to fill the local need for qualified physicians and medical professionals, as well an agreement with two hospitals in the capital of the Philippines, Manila, where they can send local patients for off-island treatment.

This was revealed about two weeks ago by LBJ chief executive officer Mike Gerstenberger, when he was the guest speaker at the Chamber of Commerce meeting. A Chamber member asked about the off-island medical referral program costs and utilization of medical facilities in New Zealand and Australia.

Gerstenberger said the off-island medical referral program has not been fully funded since December 2008 and LBJ did look at costs of medical care in New Zealand and Australia, as both are lower than costs in Honolulu.

However, he said most of the funding for LBJ comes through the federal Medicaid program and the federal government does not pay for health care services outside of the U.S; therefore LBJ cannot send patients to Australia and New Zealand to be paid by Medicaid funds.

He then pointed out that there is a financial benefit for LBJ if “a better arrangement” can be made with “two wonderful hospitals” in Manila — which are certified by the Joint Commission on Accreditation of Health Care Organizations — the group that certifies most U.S. hospitals.

Gerstenberger explained that Medicaid and Medicare, another federal program for the elders, can be used to pay for medical care at these Manila two hospitals, due to their U.S. certification, and the costs there are about the same as those in Australia and New Zealand. He said these two hospitals — one of them is St. Luke’s — provide excellent quality care, “better than most U.S. hospitals.”

He also said that LBJ had asked the Fono and the governor for $10 million for the referral program, and if the hospital can get some of that money, it can be used to cover costs for the Manila hospitals. (The Senate rejected the $10 million bill during the 3rd regular session.)

“For the segment of the population that can tolerate the [long] trip... we can do a single source hospital agreement with a hospital in Manila” for patients from American Samoa, he said. (LBJ also has a travel discount agreement with Hawaiian Airlines from Pago Pago to Honolulu to Manila).

According to the CEO, there were two rheumatic heart disease cases in late 2010 in which LBJ paid around $180,000 per case for off-island care in Honolulu. However, the St. Luke’s hospital “would give us a package deal at $16,000” for this type of medical care and “the outcome is as good as Queens and Straub” hospitals in Honolulu, he said.

“So we could do ten patients in Manila for the cost of one patient in Honolulu,” he said and noted that “LBJ just needed to figure out how not to alienate the feds, who currently provide about 80% of LBJ’s funding,”

A chamber member asked why the costs are so low in Manila and Gerstenberger replied, “it’s their labor” costs.

“The Philippines is one of the few places where we can attract health care professionals, as American Samoa actually pays more than the Philippines — a country with 36 medical schools — they have an excess of physicians,” he explained.

“So whenever we can find enough money and convince [local] immigration to let a doctor in, the Philippines is one of the first places we look,” he said adding that LBJ has a number of nurses and lab techs from the Philippines “because to them it makes economic sense to come here, and they have a pool of highly trained and well qualified physicians.”

He said he can’t hire from the mainland because of the high salaries offered in the U.S. compared to what LBJ can offer and there is just not enough money in the LBJ budget.

For example, the average radiologist in the U.S. makes about $480,000 per year and “I can offer maybe $90,000,” he said and noted that there is a lack of radiologists for the local medical center.