A few facilities, however, agree to the discounts, ranging from 50-85 percent, and are rewarded with substantial volumes with the bill paid completely before surgery begins, Mr. Baker says. The company, based in British Columbia, books about five patients a day in U.S. facilities for everything from MRIs to hip and knee replacements, to cardiac bypass surgery. Mr. Baker says $30,000-$40,000 a day in gross billings is not uncommon.
North American’s discounted volume goes to 22 U.S. facilities in 10 states, including Maryland, Oklahoma, Nevada, Arizona, Montana, South Dakota, Washington and Kansas. Most of the sites are physician-owned surgery hospitals and three are ASCs. Mr. Baker says clients tend to have underutilized ORs, making the extra volume worthwhile, even with the discount. “The client figures, we already have the overhead expenses, so all we need is to cover the incremental costs,” he says.
Growing interest from patients
North American Surgery is part of the rising “medical tourism” industry, which usually sends U.S patients to Third World countries such as India, Thailand, the Philippines and Costa Rica, for deeply discounted surgery. But North American Surgery sends its patients exclusively to U.S. facilities because other countries pose greater risks, such as parasites or typhoid fever, and the long plane ride home can harm recovery, Mr. Baker says. Above all, U.S. facilities have higher quality standards. He says his clients have not had a single complication from surgery.
Mr. Baker has been seeing growing interest for his heavily discounted arrangements on the part of patients, who tend to come through his two Web sites, Northamericansurgery.com for U.S. patients and Timelymedical.ca for Canadians. Two-thirds of customers are Canadians who want to get off long waiting lists for surgery in their own country. And one-third are Americans who tend to be self-employed with substantial incomes but no insurance coverage. Mr. Baker says many of them are independent salespeople, such as car dealers. “Realtors are notorious for being uninsured,” he adds.
A rebuke of socialized healthcare
Mr. Baker founded the company in 2003 to provide immediate access to surgery for Canadians, who often wait two years for surgery. Unable to buy private insurance at home, their only recourse is to pay out-of-pocket for surgery abroad. “Would you rather pay $16,000 for an operation in the states or spend two years of your life in misery?” Mr. Baker asks. He says his referrals to U.S. facilities have saved the lives of seven Canadians on waiting lists so far.
Mr. Baker’s experience with Canadian waiting lists has made him a vocal critic of the Canada’s system of government-run coverage. “Adopting socialized healthcare is a colossal blunder,” he says. He has similar views about the new U.S. healthcare reform law and has spoken out against it at Tea Party rallies in the states. “This law will go down as one of the worst pieces of legislation in U.S. history,” he says.
In addition, the law’s mandate for everyone to buy insurance would wipe out North American Surgery’s client base of well-to-do uninsured Americans. Recognizing an opportunity in the U.S. market, Mr. Baker started an American division in 2006. An uninsured chiropractor in Oakland, Calif., had a blocked carotid artery, which would have cost him $100,000 to fix. Mr. Baker arranged surgery for him in the states at a cost of $15,400.
Working with physician-owned facilities
Mr. Backer prefers contracting with physician-owned facilities rather than acute care hospitals. “It’s so much easier to deal with a physician-owned hospital,” he says. “I can call the CEO of a heart hospital and talk with him directly.”
The company does not negotiate prices, Mr. Baker says. The facility sets its own price, but to gain referrals, its discount needs to be in line with that of other participating facilities. The facility’s global price can cover incremental costs, such as the surgeon’s fee and payment for the surgeon’s assistant, anesthesia services and surgical supplies, plus “a modest profit” for the facility, the company says. The price, the company adds, should not include payment of the rest of the staff and fixed costs such as utilities, amortization of equipment or the mortgage.
The patient pays the full cost before surgery in the form of a certified check or cashier’s check, made out to North American Surgery, and the company sends a check for the full payment to the provider. “There is no paperwork,” Mr. Baker says. “The facility doesn’t even invoice us.” No payments can be made after surgery. “If you ask for payment afterwards, you’re lucky if you can collect,” he says.
Mr. Baker will not work with insurance companies, even under limited circumstances, because insurers might start pegging their normal rates to the heavy discounts. He briefly explored the option of contracting directly with self-insured employers for discounts but found companies could not convince all employees to accept the arrangement. “Some of them don’t want to go to Kansas for their surgery,” Mr. Baker said.
As health insurance premiums rise, hefty discounts on big-ticket surgeries will look more inviting, but “it has to be a matter of individual choice,” he says.
