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Dr. Keith Smith, right, an anesthesiologist who started Surgery Center of Oklahoma, looks on as Dr. Don McGinnis, left, and physician's assistant Steve Popielec, right, perform a surgery at the center in Oklahoma City, Thursday, Oct. 10, 2013. Through a website called Medibid, some patients who pay out of pocket for their care are soliciting doctors, hospitals and medical centers, including this one, to bid to perform non-emergency procedures. (AP Photo/Sue Ogrocki)
Companies, consumers shopping for better health care deals
First Published Oct 25 2013 09:49 am • Last Updated Oct 25 2013 11:56 am

Paul Freeman drove 600 miles last year to save himself — and his employer — thousands of dollars on his surgery.

Freeman’s insurer covered his travel costs and the entire bill because a medical center in Oklahoma City could remove the loose cartilage in his knee for about 70 percent less than a hospital closer to Freeman’s Texhoma, Okla., home.

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At first, the community bank CEO hesitated because he thought the lower price would mean lower quality. But he knew if he didn’t make the roughly 10-hour roundtrip trek, he’d pay about $5,000 out-of-pocket.

"You immediately think, ‘Oh they’re going to take me into a butcher shop and it’s going to be real scary,’" Freeman, 53, says, noting that instead he had "a wonderful experience."

People shop for deals on everything from cars to clothes to computers. Why not for health care too?

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. They’re also providing online tools to help people search for better deals in their home market.

And some patients are bargain hunting on their own. Through a website called MediBid, people who pay out of pocket are soliciting doctors, hospitals and medical centers to bid to perform knee surgeries and other non-emergency procedures.

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. These so-called high-deductible plans also will be among the cheapest options available on the public exchanges set up as part of the health care overhaul to enable millions of uninsured people to shop for coverage.

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."


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Searching for health care deals is a big change for many patients who’re used to paying whatever their insurer didn’t. Just figuring out an appropriate price for a procedure can be difficult for the average person.

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. And the portion that patients pay can vary widely. 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.

"You can be a highly educated consumer now and still not understand what bill is going to hit you," says Dr. Giovanni Colella, CEO of Castlight, which designs an application that insurers or employers can give to patients to help them shop for health care based on price and quality.

It’s also tough for patients to measure quality versus price. "You may find something (more expensive), but it doesn’t mean it’s better, safer, or more efficient," says Arthur Caplan, a medical ethicist at NYU Langone Medical Center.

Insurers and employers are encouraging workers to become more educated. They say quality is a priority when they ask patients if they want a better deal.

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. Wal-Mart is doing this through a national Employers Centers of Excellence Network that it joined with other big companies like the home improvement chain Lowe’s.

Premera Blue Cross Blue Shield, Alaska’s biggest health insurer, started a program in January that will pay expenses for some of its members to fly to Seattle for some procedures that come with huge price breaks. For instance, a knee surgery that costs $27,100 in Alaska can be performed for $13,000 in Seattle, according to the insurer.

A Premera spokesman says only a couple people have used the program so far, but the insurer expects use to pick up as it includes more members next year.

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