The Business of Health Care

Can Health Care Be Bought and Sold on eBay?

We’re not quite there yet. But there is a new website that is getting close.

A small, emerging online service called MediBid is creating an actual market that puts doctors together with patients who need care.

Here’s the best thing about it. Patients who use this service can cut their health care costs in half. No, that’s not a misprint. Patients who obtain care through MediBid pay about half as much as BlueCross pays. Ditto for all the major employer plans as well as the other big insurance companies. Patients frequently pay even less than what government pays under Medicare.

Here’s the worst thing about it. Once ObamaCare kicks in, entrepreneurial ventures like this one will probably be nipped in the bud. That’s because the Obama administration doesn’t believe that patients can or should be able to buy care in an open marketplace. In fact, once they get through implementing the 2,700-page bill with 159 regulatory agencies and 10,000 pages of regulations, patients are unlikely to ever see a real price for any type of care.

At least for the time being, however, a market for medical care is emerging. Here’s how it works.

Patients who are willing to travel and able to pay cash, can request bids or estimates for specific medical procedures. They fill out medical questionnaires and they can upload their medical records. The patient’s identity is kept confidential until a transaction is consummated. MediBid-affiliated physicians and other medical providers respond by submitting competitive bids for the requested care.

Business at the site is growing. For example, last year the company facilitated:

•More than 50 knee replacements, at an average price of about $12,000, almost one-third of what the insurance companies typically pay and about half of what Medicare pays.

•Sixty-six colonoscopies with an average price between $500 and $800, half of what you would ordinarily expect to pay.

•Forty-five knee and shoulder arthroscopic surgeries, with average prices between $4,000 and $5,000.

•Thirty-three hernia repairs with an average price of $3,500.

MediBid facilitates the transaction, but the agreement is between doctor and patient, both of who must come to an agreement on the price and service.

One key component of all this is the willingness to travel. If you ask a hospital in your neighborhood to give you a package price on a standard surgical procedure, you will probably be turned down. After the government suppression of normal market forces for the better part of a century, hospitals are rarely interested in competing on price for patients they are likely to get as customers anyway.

A traveling patient is a different matter. This is a customer the hospital is not going to get if it doesn’t compete. That’s why a growing number of U.S. hospitals are willing to give transparent, package prices to out-of-towners; and these prices often are close to the marginal cost of the care they deliver. Interestingly, a lot of the out-of-towners getting the cut-rate prices are foreigners.

North American Surgery has negotiated deep discounts with about two dozen surgery centers, hospitals and clinics across the United States, mainly for Canadians who are unable to get timely care in their own country. The company’s cash price for a knee replacement in the United States is $16,000 to $19,000, depending on the facility a patient chooses.

But the service is not restricted to foreigners. The same economic principles that apply to the foreign patient who is willing to travel to the United States for surgery also apply to any patient who is willing to travel. That includes U.S. citizens. You don’t have to be a Canadian to take advantage of North American Surgery’s ability to obtain low-cost package prices. Everyone can do it.

The implications of all this are staggering. The United States is supposed to have the most expensive medical care found anywhere. Yet many U.S. hospitals are able to offer traveling patients package prices that are competitive with the prices charged by top-rated medical tourist facilities in such places as India, Thailand and Singapore.

All of this illustrates something many of my readers already know. Markets in medical care can work and work well — provided government gets out of the way.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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Guest

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Ester
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BobbyG
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“Patients who are willing to travel and able to pay cash, can request bids or estimates for specific medical procedures.”
__

Yeah, now THERE’S a huge market. But, once we get those Ryan Medicare vouchers, everything will be fine.

steve
Guest
steve

I am sure John is aware of fixed costs. Volumes are down for surgical procedures across the country. Picking up a few extra procedures, even at a loss, may avert a larger loss. We will have to see how MediBid works in a busier market. I would also be loathe to make projections based upon 200 procedures.

Steve

Cindy
Guest
Cindy

The website the author refers to is not really breaking new ground, and he is missing a couple key drivers of this trend. Medical services can be deeply discounted where there is 1) no insurance billing cost (which is up to 40% of the provider’s expense in primary care at least), and 2) no collection cost or risk since the patient is paying at the time of service. That’s what membership services like direct primary care based on and why they are so much more affordable for patients.

Peter1
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Peter1

Let’s see, I’m able to get a knee replaced for half the cost if I go to say, North Dakota, but a person living in North Dakota would pay full price. Now in my home state of North Carolina a person from North Dakota would get half price for a knee replacement, but I would pay full price.

Does anyone else think this is ludicrous?

Tess St Clair
Guest

Hi, Peter, your illustration is hard to understand. There’s no reason why, in North Carolina, you couldn’t get the same price as North Dakota, unless your medical board has lobbied for legislation that forces prices up. Eg: in some states, you must use a hospital for a colonoscopy, and you must be under general anesthesia. THAT’S totally ludicrous, but that’s what medical boards do, and it increases the price two or three-fold.

Hub Mathewson, MD
Guest

MediBid may just be the tool that economists and governments have all been looking for: a real measure of the value of a medical procedure. Governmental fee schedules guess at that value. Specialty societies lobby and negotiate over it. Insurance fee schedules arbitrarily try to reduce it. Patients have no idea what it is. What better way to establish the vlue of a medicl procedure than put it up for auction! Of course, the requirement for cash on the barrel head will reduce the number of the bidders and could give a skewed result, but once the value is known… Read more »

rbar
Guest
rbar

Even if all the above was true, I would not expect that this allows “to establish the vlue of a medicl procedure” because the reimbursement system is so highly skewed toward procedures. You might get your completely overvalued surgery/procedure for 30% off, but you will not find cognitive services (e.g. rheumatology eval without procedure) to be any cheaper, and the procedure likely will still be much more costly than the cognitive service.

Tess St Clair
Guest

Hub, I want to make sure folks understand that we designed MediBid in a way that it does NOT DRIVE PRICES up or down. So, technically, it is not an auction. Doctors do not see eachothers prices, only the patient sees them, and patients use their own criteria for accepting bids.

BobbyG
Guest

“the 2,700-page bill”
___

906, to be exact.

Peter@selfpaymri.com
Guest

“ObamaCare” may in fact establish more usage of online medical markets! Referral authorizations, peer-to-peer, and other rationing / cost-control techniques are only going to increase. We’ve established an outpatient imaging marketplace on SelfPayMRI.com and typically see discounts in the range of what was stated above. Cash pay rates of well under the MCA for the patient’s locality are typical. A few barriers need to be addressed to include FEE SPITTING and PATIENT BROKERING Statues – all need a bit of tweaking to allow for these online markets to truly scale and flourish (Both Ebay and Groupon seem to violate one… Read more »