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Employers and Physicians Controlling Costs and Keeping Patients in U.S.


Employers are constantly challenged to control healthcare costs, a benefit associated with operating a successful business. In addition to the uncontrollable cost of healthcare, our nation’s medical delivery system is disjointed and inconsistently priced per procedure. This is due to inconsistent charges from doctors, hospitals, and for durable medical equipment, pharmaceuticals and anyone or anything else related to providing healthcare.

We can shop for cars, homes or televisions, but we can’t shop for what our lives depend on — healthcare? Would you drive a car off the lot without knowing the price? Of course you wouldn’t. So why do we go in for surgery without knowing the true cost to receive that episode of care?

For years, my clients have struggled to remain competitive and provide their employees with a competitive wage and benefit package. As a consultant, my only means of controlling these client costs was to dilute benefits (increase co-payments, deductibles, coinsurance and out of pocket maximums) for the employee, or increase my client’s exposure by increased specific and aggregate stop loss.

In today’s healthcare industry, the cost for a surgery fluctuates drastically. Because of a disjointed healthcare system today, we see prices from all billing entities fluctuating sometime more than 200 percent from their competitor.

The price doesn’t always necessarily mean quality, either. In one instance, my client paid 75 percent more than another facility had charged for the exact same procedure and in the case of the higher cost procedure, the member ended up having an avoidable complication.

This “free-for-all” in today’s healthcare system is part of the reason our medical premiums are out of control.

As we approach the reality of healthcare reform and more governmental control over the industry, the private sector in the United States will be confronted to engage in conversations, learn and understand the challenges of the industry, and work to develop opportunities for those serving America’s health needs. All of this will be essential to remain competitive as our U.S medical delivery system evolves.

This “free for all” in today’s healthcare system is part of the reason our medical premiums are out of control.

Medical tourism has large growth prospects and potentially destabilizing implications for industrialized nations. A forecast by Deloitte Consulting published in August 2009 projected that medical tourism originating in the United States could jump by a factor of 10 in the next decade.

An estimated 750,000 Americans went abroad for healthcare in 2007, and the report estimated that 1.5 million would seek healthcare outside the United States in 2008. The growth in medical tourism has the potential to cost U.S. healthcare providers billions of dollars in lost revenue.1

We know that figures of American-based employees seeking medical care outside the United States are much larger today. In fact, about 2.2 million surgeries are lost to foreign countries each year.

Additionally, some patients in industrialized nations are finding that insurance either does not cover some elective surgeries, such as knee/hip replacement, or limits the choice of the facility, surgeon, or prosthetics used.

Medical tourism for knee/hip replacements has emerged as one of the more widely accepted procedures because of the lower cost and minimal difficulties associated with traveling to/from the surgery.

Figures of American-based employees seeking care outside the United States are much larger today… an estimated 2.2 million surgeries are lost to foreign countries each year.

International health tourism facilitators act as intermediaries to connect potential medical tourists with foreign providers, hospitals and other organizations. Companies are beginning to embrace medical tourism options that will enable North American patients to access world healthcare at a fraction of the cost of domestic care.

Companies that provide medical value travel, typically provide case managers to assist patients with pre- and post-travel medical issues. They also help provide resources for follow-up care upon the patient’s return.

Understanding loss of income to U.S. providers, private organizations in the United States are engaging in conversations with U.S. surgeons and facilities to develop bundled surgical case rates to include the surgeon, facility, and anesthesiologist as well as all therapies and pharmacy costs associated with the episode of care.

This has to happen if the United States intends to compete with medical tourism options available overseas. With bundled surgical case rates, employees and employers know the TOTAL cost of the procedure before it takes place. Bundled surgical case rates are not something new, in healthcare policymakers are experimenting with several approaches within the Affordable Care Act that impact providers and facility reimbursement rates and serve as an incentive to work together and provide positive outcomes.

Accountable Care Organizations (ACOs) have been paid by the federal government to establish measurable guidelines which must be met under law and ties all federal subsidies to quality outcomes.

There are now large companies in the United States which have established very narrow “private” networks with 4-5 facilities strategically located across the country to serve employees needing a pre-planned surgery. Employees are incentivized to utilize these “private” narrow networks with employer-paid deductibles and out-of-pocket maximums.

These facilities agree to bundle cases and provide these employers and employees with an out-the-door cost to receive care. These surgeries include the orthopedic, cardiovascular, spine and general surgery specialties.

The claim from these narrow networks is that they provide quality; however, I would question who the oversight committee is that determines quality. Is it the provider who performs the procedure or facility where the procedure takes place?

Bundled surgical case rates have to focus on the quality of care by those providers performing these procedures to be effective and grab the attention of those seeking to control costs. In addition, care coordination, from the time the member is heard from through post-operative follow up, is essential to ensure full recovery and avoidance of complications or re-admissions to the hospital due to infection or lack of treatment plan adherence.

An important aspect to consider when seeking adoption of this approach is to determine how physicians and facilities are selected. I believe the surgeon is the key to success! You can have the best facility in the nation; however, if a surgeon has a history of complications, where the procedure is performed makes little difference.

There are several advantages for top surgeons to join some of these new networks offering bundled surgical case rates in the United States. First, more patients are directed to them for services rather than overseas for care. In addition, they are paid quickly, typically within 10 days of completion of the surgery.

Because bundled case compensation is acknowledged, there is no need for a collections department to chase down dollars and increase administrative costs. These incentives are enabling more providers to seek the assistance of private organizations in bundling case rates for the procedures they perform.

While there are a handful of these private organizations building narrow networks to provide bundled case rates today, I believe this concept will sweep the country and provide more transparency to our current medical delivery system and address spiraling costs.

While elective surgeries and the lack of transparency related to the cost of these procedures today are only a fraction of the total problem facing the United States healthcare industry, I believe engaging in these conversations with surgeons and facilities sets the groundwork for other opportunities to control future costs.

About the Author

Michael G. Muldoon, has spent more than 20 years in the medical industry, beginning on the carrier side in 1991 with United Dental Care, in Denver, Colo. In June of 2013, he joined Employer Direct as senior director of sales to establish relationships with large self-funded companies and national benefit consultants to help them control overall medical costs through SurgeryPlus, a “stand alone” national network of top surgeons and facilities delivering 30-50 percent savings to clients off current network discounts as well as boasting a complication rate more than 50 percent under the national average.

SurgeryPlus is a benefit which overlays, not replaces any self-funded medical plan option and delivers quality to the end user. SurgeryPlus is bringing medical tourism back to the United States and attracting attention from Fortune 100 and Fortune 500 companies nationally.

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