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Why Most People Don't Shop Around For Medical Procedures

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We shop around when we get a plane ticket or buy a couch. But we spend thousands of dollars on health care without comparing prices. What happens when you pay patients to choose the cheaper option?

STEVE INSKEEP, HOST:

Now, suppose a store is selling a couch for $3,000. Suppose another store down the street sold the same couch for $500. You would likely shop at the store with the lower price, wouldn't you? But it's entirely different if you're getting an MRI. Most people do not shop around for medical procedures. You go where somebody sends you - and hope your insurance covers it. Now a company is trying to change that. Here's David Kestenbaum with NPR's Planet Money podcast.

DAVID KESTENBAUM, BYLINE: The company is called Vitals. Their pitch - before you get that MRI or get that gallbladder out, give us a call. We will make it worth your while.

CATHY TROMBI: Good morning. Thank you for calling SmartShopper. This is Cathy. How may I help you?

KESTENBAUM: Cathy Trombi works in company's call center in Manchester, N.H. It's small, just five people. The woman on the phone needs to get some bloodwork done. So Catchy looks up places she can go.

TROMBI: So what our system does is it searches a 20-mile radius from your home ZIP code.

KESTENBAUM: Even for a blood test, one place might charge $300, another just $75. Cathy does not tell the woman to go to the cheaper place. She explains that it's her choice. But she says if she does go, there's something in it for her. Vitals will send her a check for $25. She can spend it on whatever she wants. The woman says OK.

TROMBI: Thank you. Bye-bye.

Another happy customer (laughter).

KESTENBAUM: It's a fun call center job, where you get to give away money. How can they afford to pay that woman $25? Cathy's company, Vitals, has deals with insurance companies and employers. If the woman goes to the cheaper place, they are going to save hundreds of dollars. So they're happy to pay her 25 bucks. I asked Cathy what's the most money a patient could make? And she said probably someone getting Remicade infusions for rheumatoid arthritis.

TROMBI: It's a very expensive procedure. And so then they might call us if they've heard about us. And we switch them to a different location, and then they get $500 every month, you know, just for calling us.

KESTENBAUM: A $500 check every month?

TROMBI: Yeah, yeah.

KESTENBAUM: Five-hundred dollars every month just for going to the cheaper place. If that sounds like a lot of money for making a phone call, know this - the savings in a situation like that for the insurance company or employer can be over $200,000 a year. But for a patient, the checks feel like free money. Beth D'Ovidio remembers getting her first check. It was just for getting some routine bloodwork done.

BETH D'OVIDIO: I cashed it and put that check and all of my subsequent checks in this jar with a cork lid. It's there for a rainy day.

KESTENBAUM: D'Ovidio works for a local union, and she told me about this one group of women who live up in a rural part of the state. They needed to get mammograms done, but there weren't any places nearby. So they thought what the heck? We'll make a day of it.

D'OVIDIO: They get a limo, and they all come down together. And they go and they get their mammograms. And then they do a little shopping down here at the mall. And then they go out to dinner. And then they go back up. They've probably paid out as much as they were going to get in the incentive checks, but they love it.

KESTENBAUM: Patients love it. Insurance companies love it. And in the long run, this is the kind of thing that could help keep down the cost of health care. There is, though, one loser in all of this - the places that have been charging more for bloodwork and MRIs and knee replacements. Often, those places are hospitals. William Goodman is the chief medical officer at Catholic Medical Center, one of the more expensive places to get an MRI done in New Hampshire. He told me he had heard of this idea of paying patients to shop around, and he liked it.

WILLIAM GOODMAN: Yeah, I'm familiar with these services. I think they're a good idea.

KESTENBAUM: I thought you were going to hate this thing.

GOODMAN: Really?

KESTENBAUM: Well, it's not good for your business.

GOODMAN: Our business is taking care of people.

KESTENBAUM: Goodman says none of the prices in health care make much sense. His hospital charges more for an MRI in part because it has to cover other costs, like the emergency room and the helipad on the roof. So, yes, he says, fix the prices for mammograms and those other things. But eventually, if the system is going to work, you're going to have to fix all the prices. David Kestenbaum, NPR News.

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