Saving on Surgery by Going Abroad

The number of U.S. patients who came to Wockhardt doubled in 2007.

There would be no need for uninsured patients to go abroad at all, of course, if the prices they were quoted in the United States were more in line with what insurers and Medicare pay. In U.S. hospitals, the uninsured and wealthy foreigners are the major groups charged full price for an elective procedure. (People who come in through the ER for nonelective surgery will get a list-price bill, but few hospitals expect to be fully repaid.) There should be plenty of room for price cutting—for routine heart-bypass surgery in Texas, the list price is about $70,000 at one hospital in Abilene and $47,000 at one in Austin. But commercial health plans typically pay at least 60 percent below list. And Medicare pays even less—$18,609 to $23,589 on average for an uncomplicated bypass.

Would a U.S. hospital be willing to negotiate a heavily discounted price in advance with an individual patient? "If you go in and say, 'I'm paying for it myself, I'm not covered,' " says Richard Schirmer, vice president for healthcare policy analysis at the Texas Hospital Association, "they'll give you maybe 10 or 20 percent off if you pay cash upfront for the whole thing—at most, 20 percent off the rack rate." Rick Gundling, a vice president of the Healthcare Financial Management Association, which represents hospital financial administrators, can't name a hospital willing to go further, but he sees the day drawing closer. "Hospitals should embrace the retail market," he says. " As patients start calling around to shop prices, hospitals will have to start to compete on price, and medical tourism will add a whole new level of competition."

Coming in with a concrete "let's make a deal" proposal can't hurt. "Ask to pay the Medicare reimbursement, and offer a very, very aggressive payment plan," suggests Gwynn Smith, a partner with HFS Consultants, an Oakland, Calif., group that works with healthcare organizations. "Offer to put a lot down—20 or 25 percent, more if you can—and pay it off as fast as possible." (Average Medicare payments for many common procedures are available at www.hospitalcompare.hhs.gov.) Your best shot at success, Smith says, is to get in to see the chief financial officer. Lower-level financial counselors "have no idea of the costs," she says.

In a sign of market forces at work, a handful of American hospitals have struck deals with North American Surgery, a Canadian company formed last August to match U.S. hospitals in Kansas, Michigan, New York, Oklahoma, and Washington that are willing to provide certain procedures inexpensively with American patients who need them. Only travel and lodging are extra. Hip or knee replacement or heart-bypass surgery is $14,000; weight-loss surgery is $10,000 or $15,000. The service is free; the company is paid by the hospitals.

Agreeing to offer low prices is mostly what qualifies hospitals to make the list, says Richard Baker, the entrepreneur behind North American Surgery. He says he also makes use of HealthGrades.com, a service that gives hospitals one, three, or five stars for performance. But in the latest ratings, Oklahoma Heart Hospital, one of those on Baker's roster, gets one star ("poor") for bypass surgery death rates in the hospital, at 30 days, and at six months. Baker doesn't concern himself with physicians' performance; he relies on the hospitals to find good surgeons and monitor them.