Healthplace America Was Recently Featured in the Wall Street Journal and Dow Jones Newswires
September 10, 2008
The following article appeared in:
Dow Jones Newswires on September 9, 2008
The Wall Street Journal on September 10, 2008
NEW YORK (Dow Jones)--In a new twist on medical tourism, U.S. employers are encouraging workers to travel domestically for care.
Some employers are looking to take advantage of huge geographical variations in the quality and cost of health care within the U.S., while others are leveraging deals they've struck with foreign hospitals to secure better rates with U.S. hospitals eager to keep American patients here. Most of the activity is focused on surgical procedures, such as hip and knee replacement and cardiac bypasses.
"Employers are looking to get the best value for their health-care dollars," says Randall Abbott, senior consultant at Watson Wyatt. That means finding new ways to both manage their medical costs and provide their employees with high-quality care," he says.
Employers are offering financial incentives, such as no out-of-pocket costs - which alone can save workers thousands of dollars - money for travel expenses, and access to concierge services that schedule appointments and organize travel arrangements, as enticements.
Americans have been traveling abroad to receive medical treatment for a while, but only recently have U.S. employers expressed an interest in it. The prospect of losing revenue overseas is prompting some U.S. hospitals to match lower foreign prices.
In January, U.S. supermarket chain Hannaford Bros Co. began to offer employees the option of getting hip and knee replacements at a hospital in Singapore. A hip replacement costs about $43,000 in the U.S. compared with $9,000 in Singapore, according to data from PlanetHospital, a medical tourism company.
"After the announcement, I got calls from several (U.S.) hospitals offering to match Singapore on pricing," says Peter Hayes, Hannaford's director of associate health and wellness.
Hannaford, which is self-insured and therefore pays the medical claims of its 9,000 covered employees out of its own funds, tapped Aetna Inc. (AET), which manages its health benefits, to vet the U.S. hospitals.
So far, Hannaford, which is based in Scarborough, Maine, has negotiated a deal for hip, knee and spine surgery with a hospital in Boston, located in the nearby state of Massachusetts. Negotiations with a hospital in Maine are ongoing, according to a staff member in Hannaford's human-resources department.
Typically, Hannaford's workers must pay for some of the cost of surgery under its health plan. But if employees choose next year to go to the hospital in Boston for a procedure, Hannaford will pick up the entire tab. For knee surgery, that would be a savings of about $3,000 for the employee. Hannaford will also provide a travel allowance for the employee and a companion.
Such arrangements could appeal to American workers at a time when soaring gas and food prices are pummeling their pocketbooks, experts say.
"Patients are likely to be more open to traveling for care right now," says Mike Taylor, a principal at Towers Perrin, where he leads the firm's global health-care consulting practice.
"And traveling to a U.S. hospital is much less daunting than going overseas, where practical, medical and legal issues pose complex challenges for patients and employers," Taylor says.
Launched earlier this year, Healthplace America, is targeting self-insured employers, like Hannaford, looking to achieve the cost savings of medical tourism, without the need to leave the U.S. The company, based in Lisle, Ill., offers access to a specialty network of U.S. hospitals for procedures, such as hip and knee replacements, coronary artery bypasses and spine surgery.
Ken Erickson, chief executive of Healthplace America, says the network can offer employers savings of 30% to 50% on rates negotiated by insurers because the company pays the providers upfront in cash based on fixed per-case rates. (Typically insurers pay fees for service and pay providers after the surgery has been done.)
"Getting paid upfront is extremely appealing to medical providers," says Dr. Ronald Miles, a cardiothoracic surgeon at Aspirus Wausau Hospital in Wausau, Wis., who is a member of Healthplace America's network. Chasing insurers for payment after a service has been rendered takes time and costs money," he says.
Erickson says Healthplace America has already signed contracts with several employers - ranging from small firms with 100 workers to large corporations with 50,000 employees - and is also in discussions with teachers unions and Fortune 50 companies, which are considering adding it to their benefits plans next year.
By logging onto a password-protected Web site, employees can compare doctors and hospitals in Healthplace America's network with local providers by viewing reports supplied by Health Grade Inc. (HGRD), a private company that independently rates doctors and hospitals nationwide.
Workers who choose an in-network provider are assigned a care manager, who collects medical records, schedules appointments, makes travel and lodging arrangements and organizes post procedure follow-up, he says. They can also save money: there are no deductibles, co-pays or coinsurance. And the cost of travel and associated expenses are covered.
At the moment, Healthplace America's network consists of 15 hospitals, in places such as San Diego; Austin, Texas; and Chicago. Erickson says the company will soon be expanding the network to include providers on the East Coast.
(Victoria E. Knight is a Getting Personal columnist who writes about the financial implications of health-care issues. She can be reached at 201-938-2438.)
Victoria E. Knight
Columnist
