Controversial couple dominates U.S. medical tourism

NEW YORK Wed Oct 28, 2009 9:34am EDT

1 of 2. A U.S. patient is prepared for a two-hour surgery at a Bangkok hospital in a file photo.

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NEW YORK (Reuters Health) - These are heady days for the medical tourism industry. With U.S. healthcare prices spiraling upward, more and more insurers and individuals are looking abroad for treatment. By some estimates, 650,000 Americans will check into foreign hospitals from Mexico to Thailand this year.

The boom has created rich opportunities for entrepreneurs catering to first-time medical travelers, start-up businesses and eager hospital managers in developing countries.

Enter lawyer couple Jonathan Edelheit and Renée-Marie Stephano.

Edelheit and Stephano, both 37, are the founders of the Medical Tourism Association (MTA), a non-profit association they created to further "quality of care, transparency, communication and education" in the industry. They are also the organizers of the industry's annual top conference, under way this week in Los Angeles.

In many ways, Edelheit and Stephano have become the face of medical tourism. That has caused admiration, envy and unhappiness in the tight-knit industry.

Former MTA board members and industry colleagues have stories of how their collaborations with the couple have become marred by a sense of disillusionment and legal threats since the organization was founded in 2007. Their concerns center on three issues:

- Edelheit has been accused of selling unauthorized insurance in Washington and Montana. The first probe has been settled. Edelheit dismisses the allegations and says the second investigation will be settled in his favor.

- Edelheit and Stephano have threatened several critics with legal action and have filed one lawsuit against a competing non-profit. Edelheit calls it legal diligence to protect themselves and the MTA's members.

- The couple set up a thriving annual conference, but critics say the profits go into their private corporation rather than the industry association. Edelheit says the arrangement benefits the MTA.

Rudy Rupak of medical tourism facilitator Planet Hospital captured the feelings of many industry players in December when one slide of his Powerpoint presentation said: "The biggest threat to our industry is the MTA."

ALLEGATIONS OF "BOGUS HEALTH PLANS"

Edelheit's foray into health insurance started in 2001 after he left the Villanova University School of Law and moved to Florida to join his father's company, United Group Programs.

As vice president of sales for the company's OptiMed Health Plans, Edelheit says he became the first to sell self-funded employee health plans that included medical travel in 2005. OptiMed's Web site lists companies like Dunkin' Donuts and Chrysler as clients.

The Washington State Insurance Commissioner alleged in 2007 that Edelheit and others had sold or managed "bogus health plans" to 4,000 residents and made "false, deceptive, and misleading representations" to customers between 2003 and 2007. Edelheit, United Group and OptiMed Health were also named in a Montana investigation.

"I have never been so screwed over in my life," one consumer, Judy Bergin, told an investigator with the Washington State Insurance Commissioner. Bergin had found a plan on the Internet later linked to the United Group, made an initial payment of $275 and paid $228 a month thereafter. She said her doctor never got paid, leaving her to foot about $3,000 in medical bills.

Edelheit and his father bought insurance from underwriters, and were responsible for paying claims filed by customers, according to the investigator's report obtained by Reuters Health. The policies were not authorized in Washington and the Edelheits did not always pay the underwriters' premiums on time, the report said.

The Edelheits have since settled with Washington, agreeing to no longer sell insurance there. Edelheit brushes off suggestions that he was doing anything wrong, and says he is confident that a pending cease-and-desist order in Montana will be dismissed. Stephano calls the Washington investigation a "witch hunt."

FROM INSURANCE TO MEDICAL TOURISM

The couple set up the non-profit Medical Tourism Association in May 2007, persuading the industry's big names to join their advisory board. But former board members say they had little power, and were just part of what one calls "the Jonathan and Renée show."

By the end of 2008, Karen Timmons of Joint Commission International, Laura Carabello of CPR Communications, John Bridges of Johns Hopkins University and Ruben Toral of Medeguide had all resigned. Uwe Klein of Germany's Health Care Strategy International resigned this year, saying that the organization sought to dominate the conversation on medical tourism.

"The world has more countries than Florida," Klein says. At least a few were upset after the couple announced an accreditation program for foreign hospitals and agents who book medical trips. They complained the program was not transparent and did not link its stamp of approval to an operator's quality of care.

Edelheit and Stephano have since backpedaled. A facilitator "certification" program is in pilot phase. Applicants pay $2,500 and answer an extensive questionnaire.

Bethany Van Boxtel of Guam-based Veiovis, who is undergoing the process, says the MTA is filling a gap: "We were looking for some kind of accreditation or certification to give validity to travel facilitators."

Experts agree patients need to check out operators.

"Most facilitators are operating from a basement and a BlackBerry," says Maria Todd of the Council on the Global Integration of Healthcare.

But the industry's biggest names have expressed little interest in MTA's certification program.

"I don't know that they are qualified to certify," says Victor Lazzaro, CEO of BridgeHealth. "No one has asked us if we are certified, and we have a million lives under contract."

SEE YOU IN COURT

Edelheit has threatened critics with legal action.

Keith Pollard, whose company runs medical tourism web sites, says Edelheit told him he was on the verge of "defamation, slander and libel" and that he reserved "the right to proceed with a legal action" in an e-mail late last year.

Edelheit also put Dana Taormina at CPR Communications and Planet Hospital's Rupak on notice -- but did not always get the desired results.

"So I get one of those famous Cease and Desist mails from our BFFs (best friends forever) at the MTA," Rupak wrote in an email to colleagues in August. "The first thing I did was fax them a letter that read: F**K YOU!"

Edelheit says that he sent the emails to protect the reputation of the MTA, after Pollard and Rupak "distributed false statements about the MTA in writing and in person to advisory board members and (regular MTA) members."

Edelheit also filed suit against the International Medical Travel Association for trade name infringement and unfair business practices in September.

"MTA has the right and is indeed required to protect the interest in its brand against intentional confusion which has been developed through the efforts of its membership," Edelheit says.

The suit was triggered when the Singapore-based non-profit registered its U.S. arm in Florida in January. Toral, who heads the group, says the lawsuit is baseless but that he may not have money to fight it.

A spoof press release now circulating in medical travel circles says that the MTA has sued New York City's Metropolitan Transportation Authority, also known as the MTA.

"There are so many people to sue in the world," reads a quote attributed to "Edelheit-Stephano" in the phony press release. "Sometimes when I wake up in the morning, I just don't know where to begin."

LUCRATIVE CONFERENCES

Annual industry conferences are the couple's biggest coup.

"Don't be fooled by the other medical tourism conferences in the industry," their advertising materials say.

The MTA conference website says it does not "promote the interests of any private corporate or governmental interests."

Less than a year after the MTA was formed, Stephano set up a for-profit business, WMT & GHC, which runs the "Official Conference of the Medical Tourism Association." The company operates from the same address as the MTA and collects all registration and sponsorship fees.

The fees are substantial: The first conference in San Francisco in September 2008 had 850 attendees paying between $500 and $2500 each, or between $425,000 and $2.1 million.

Sponsors and exhibitors add to the tally. This year, the Council for Korea Medicine Overseas Promotion paid $100,000 to be the diamond sponsor, according to rate sheets. Malaysia Healthcare paid $75,000 to be a platinum sponsor, and three other organizations paid $40,000 each as gold sponsors. USAID was one of 13 silver sponsors, who paid $15,000 each.

While it is not unusual for a non-profit organization to have agreements with for-profit corporations, the WMT & GHC is not directly paying the MTA for rights to run the conference nor for advertisements on its website.

Edelheit says WMT & GHC provides benefits to the MTA by paying for shipping the organization's magazine, for DVDs, for promotional materials and for staff travel. It also provides a mailing list and fronts $600,000 to run the conference, Edelheit says.

The MTA received outside bids for the annual conference but "none (could) provide MTA all content and speakers, and cover the costs," Edelheit says, declining to name bidders. He did not respond to a request for an estimate of WMT & GHC's revenues.

"It sounds like the non-profit is acting like the marketing arm of the for-profit companies," says Lloyd Mayer, an expert in non-profit tax law at Notre Dame University. "If that's true, then it exists primarily to generate a profit for the companies and not primarily to promote the industry."

If they are getting rich, the couple is not showing it: They bought a single family home on 5 acres of land in West Palm Beach, Florida, for about $445,000 in 2004, property records show.

Edelheit and Stephano also own Free Health, which runs the conferences of two other healthcare non-profit associations they lead. Those conferences are taking place this week alongside the MTA at the Los Angeles Hyatt Regency Century Plaza.

Organizers expected 2,000 attendees for the MTA conference alone. Rupak is boycotting the event -- but says he rented three suites at the hotel.

"I've told everyone if they happen to be in Los Angeles, come to my party," he says.

(Editing by Ivan Oransky, Jack Reerink and Martin Langfield)

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