Companies send workers afar for bargain surgery ‘bundles’

Los Angeles TimesNovember 25, 2012 

BIZ MED-BARGAINSURGERY-BIZPLUS 1 LA

Dr. James Caillouette discusses a hip replacement revision with Mary Anne Ramey at the Newport Orthopedic Institute in Irvine, California, on November 7, 2012. (Allen J. Schaben/Los Angeles Times/MCT)

ALLEN J. SCHABEN — MCT

Carol and Ed Vogel enjoyed a weeklong all-expenses-paid trip to Newport Beach, Calif., last month, and they’re scheduled to return in a couple of weeks.

The Nevada couple didn’t need frequent-flier miles to get free airfare and hotel stay as well as $1,000 in spending money. It was all because of Carol Vogel’s ailing hips and an employer’s frustration with the high cost of U.S. health care.

Her husband’s employer, newspaper publisher Stephens Media, sends employees and their family members needing hip and knee replacements to a handful of hospitals across the country that agreed to a low, fixed rate for surgery and scored well on quality of care.

This year, grocery giant Kroger has flown nearly two dozen workers to U.S. hospitals for hip, knee or spinal-fusion surgeries to save money and improve care. Starting in January, Wal-Mart Stores will offer employees and dependents heart, spine and transplant surgeries at no cost at six major hospital systems across the nation.

Discounts for distance

It’s all part of a growing movement by employers fed up with wildly different price tags for routine operations. In response, businesses are showering workers with generous incentives – including waiving deductibles or handing out $2,500 bonuses – to steer them to these top-performing providers offering bargain prices.

Bundled deals are common for phone service and cable TV. But an all-in-one price marks a radical departure for the conventional fee-for-service medical industry in which doctors, hospitals, labs and other providers typically bill separately for each part of a procedure. Then they tack on even more if complications and unexpected costs arise.

“We want to stop paying by the widget in health care,” said Susan Ridgely, a senior policy analyst at Rand Corp., a nonprofit think tank in Santa Monica, Calif.

By bringing a steady stream of new patients, the arrangement also can be a good deal for the doctors and hospitals involved.

Federal and state officials are catching on as well. Medicare and some Medicaid programs are pushing for more of these all-inclusive prices for the most common procedures, from surgeries to maternity care for low-income mothers, to eliminate some of the huge disparities in U.S. health care costs and reward high-quality providers with more patients.

These programs are generally voluntary, so patients can still opt for care closer to home, although it may cost them more.

Not every patient suitable

Carol Vogel, a 64-year-old writer in Minden, Nev., said she was skeptical about flying to another state for surgery until the human resources manager explained how much she stood to save.

In Newport Beach, “this was 100 percent paid for,” Vogel said. If she stayed closer to home in Nevada, “I would have been out $8,000 or $9,000, easy, on my insurance.”

She said she’s pain-free in her left hip for the first time in years, so she scheduled an implant for her right hip later this month, followed by a free stay at Island Hotel, an oceanfront resort in Newport Beach.

“This is like the honeymoon we never had,” she said.

At Kroger, 21 patients have traveled for surgery this year, and none have experienced complications or been readmitted to the hospital, said Theresa Monti, a company vice president for employee benefits. She said Kroger pays about $30,000 on average for those knee and hip replacement surgeries, 15 percent less than what it pays at other hospitals.

“It’s a new concept, and some people have a hard time getting their arms around the idea of traveling for surgery,” Monti said. “We are looking for any opportunity we can to encourage the use of the highest-quality health care while holding the line on costs.”

James Caillouette, surgeon in chief at the 70-bed Hoag Orthopedic Institute in Irvine, Calif., and an advocate for bundled payments since 2008, said not every patient is a suitable candidate for the arrangement.

He rules out patients who may be at higher risk for complications from surgery.

Caillouette said his patients usually spend one or two nights in the hospital and then return to their hotel. A physical therapist visits them there most days, and Caillouette makes house calls to the hotel as well. Most patients fly home after a week.

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