Patients, Firms Shop for Better Health Care Deals

October 30, 2013

Insurers, employers and individuals are shopping around for health care as they try to tame rising health care costs. Companies are doing things like paying for workers to travel if they agree to have a surgery performed in another city where the cost is cheaper.  And some patients are bargain-hunting on their own.

Patients who shop for care represent a tiny slice of the roughly $2.7 trillion spent annually on health care in the U.S., said Devon Herrick, an economist who studies health care for the National Center for Policy Analysis.  But he and other experts expect this trend to grow, especially as more companies offer insurance plans that require employees to pay thousands of dollars before most coverage starts.

Advocates say all the shopping will help control medical spending.

"We waste an enormous amount of money in this country by overpaying for health care," says John Goodman, an economist and CEO of the National Center for Policy Analysis. "The only way to get rid of waste is to have people compete in a real marketplace."

Surgeries and other major procedures have different prices based on a variety of factors, including whether it's performed in a big city where care can cost more or in a hospital. A lot depends on the type of insurance coverage and other factors like the leverage a provider has in negotiating rates.

  • For instance, a patient in Detroit with high-deductible health coverage provided by an employer could pay $920 or $2,791 out of pocket for a colonoscopy, according to research done by health care technology firm Castlight Health. Same patient. Same insurance coverage. Only difference: Where the procedure is performed.

Wal-Mart Stores Inc., the largest private U.S. employer, provides health coverage for 1.1 million employees and their dependents. It runs a voluntary Centers of Excellence program that sends people to one of six hospital systems around the U.S. for certain heart, spine and transplant surgeries at no cost to the patient.

  • Wal-Mart spokesman Randy Hargrove says the program can save a patient between $5,000 and $10,000 in out-of-pocket costs, depending on their coverage.
  • He says so far, dozens of patients have used the program that includes care providers at nationally-recognized places such as the Mayo Clinic.
  • The retailer also recently said it would start offering no-cost knee and hip replacement surgeries for employees who travel to one of four U.S. hospital systems.
  • Some patients are deal-hunting on their own. The website Medibid, which launched in 2010, connects patients who are paying out of pocket with doctors who bid to provide care. The website's founders say they've helped about 1,800 people find care.

Patients register with the site and pay either $25 per request or $4.95 a month for a year so they can post their medical needs on the site to solicit bids.   Care providers, who register and pay fees of either $24.90 per month or about $250 annually, respond to patients with a bid.

Dr. Keith Smith, with the Surgery Center of Oklahoma, bids often on Medibid requests. Smith says his physician-owned center can offer better rates than some competitors because it doesn't charge a high facility fee like many hospitals do. The center competes on price and cuts out insurers.

Source:  Tom Murphy, "Patients, Firms Shop For Better Health Care Deals," Associated Press, October 26, 2013

 

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