The same medical procedure can cost up to three or four times as much in Maine as it does in Boston, prompting some Maine companies that fund their own employee health insurance plans to send workers down to Boston for major operations.
But some health care analysts have warned against that strategy, saying it only exacerbates the problem of high medical costs in Maine.
Mainers spend more money per capita on health care than residents of all but 10 other states, according to the San Francisco-based Kaiser Family Foundation. Massachusetts is ranked even higher at No. 3, but representatives of Maine companies that send patients to Boston for medical care say an abundance of competition in the city has led to average prices that are much lower than in Maine.
Another recent study by Pennsylvania-based medical malpractice law firm Weiss & Paarz PC found that Mainers spend more money on health insurance – an average of $1,471 per capita – than residents of any other state. The price of insurance premiums is tied to health care costs.
Maine hospitals charge as much as $44,850 for hip replacement surgery, compared with about $16,150 to have the same procedure done at a hospital in Boston, according to data from CompareMaine.org, a consumer-focused online database of Maine medical pricing, and Patient Advocates LLC, a company based in Gray that manages self-insured employee health care plans in the state. Maine hospitals charge as much as $13,500 for knee surgery that costs as little as $3,900 in Boston.
Portland attorney Richard Moon, a labor and employment expert at the law firm Verrill Dana, said it is an indisputable fact that the presence of several hospitals vying for patients in Boston has led to a huge price disparity between Boston and Maine.
“In the Boston situation it’s not a theory; I think it’s pretty dramatically so,” he said. “They have one hospital too many, and so there’s actually pretty heavy competition.”
BETTER DEALS OUT OF STATE
Because competition is relatively scarce in Maine, there’s very little incentive to control costs, Moon said. For example, doctors in Maine command salaries that are nearly as high as those in Boston, despite Maine’s much lower cost of living, he said.
“Unless you have an excess of competitive doctors, as they have in Boston … you’re not going to get anybody to really control their costs,” Moon said.
According to Patient Advocates, Maine companies that fund their own employee health insurance plans can save thousands of dollars by sending their employees to Boston for non-emergency surgeries and other expensive treatments.
“What we learned a long time ago is that, counterintuitively, you could get a lot of medical care, especially higher-end medical care, in Boston at a fraction of the cost that it is in Maine,” Patient Advocates President Jim Ward said. “It’s counterintuitive because Boston is an expensive city, but the dynamic we see down there is that there are six or seven major medical centers that all compete with each other on price, for patients, for specialists, and so on.”
In Maine the situation is reversed, with regional monopolies and scant competition throughout most of the state, Ward said.
The cost of procedures is so much higher in Maine that some employers with self-insured health plans will cover their employees’ travel and lodging expenses if they go to Boston for major surgeries, Ward said.
“For Portland it’s a couple of hours down the road, but the value proposition has been so compelling that we’ve got clients up above Bangor who will send their patients to Boston,” he said.
Moon said he also has business clients that send their employees to Boston – or even farther away from Maine – for medical procedures.
TWO NIGHTS IN PHILLY
“I remember one of our clients’ executives … had wanted a hernia operation, and there was actually a hernia clinic in Philadelphia, and he was able to fly to Philadelphia, stay two nights, have the operation, fly back, and the total cost was less than 70 percent of what it would have been here in Portland,” he said.
Still, that cost-saving strategy doesn’t work for emergency procedures such as treatments for a heart attack or stroke, and some insurance providers require their policyholders to pay higher “out-of-network” prices if they seek treatment outside of Maine.
Another problem with sending Maine patients to Boston is that it is likely to make health care in Maine even more expensive, according to some experts.
Beth Roberts, a senior vice president at Harvard Pilgrim Health Care, said the Massachusetts-based health insurance provider does allow Maine policyholders to seek “in-network” treatment in Boston, but she said the company doesn’t encourage it because more patients seeking treatment out of state would likely cause prices in Maine to increase even further.
“The more volume you have going through your system, the less you have to charge for each procedure,” Roberts said.
Jon Benoit, former president of Employee Benefits Solutions and a current vice president at Bangor-based Cross Insurance, said he understands why some Maine businesses, particularly self-insured ones, send their employees out of state for major medical procedures.
But in doing so, Benoit said, they undoubtedly contribute to higher medical costs for those Mainers who cannot leave the state for high-end medical care.
“That pulls revenue out of those (Maine) health care systems that they need in order to meet their budgets,” Benoit said. “So when they lose high-end procedures where they tend to make their margin, they have to pass on that cost, unless they can reduce their underlying expense side of the equation, to meet the requirements of that infrastructure, to meet the needs of Medicare/Medicaid and commercial (insurance).”
POTENTIAL HARM TO MAINE
It’s not unusual for patients with the incentive and ability to shop around for the best prices to travel out of state – even out of the country – to seek less expensive treatment, said Gary Claxton, vice president of the Kaiser Family Foundation, a nonprofit, nonpartisan health care research organization.
“It depends on a lot of things,” Claxton said. “They may or may not have an incentive to, depending on how their insurance is set up, and depending on their insurer they may not actually have the information to do that. (Insurance companies) all have websites, but they don’t always give you a very good sense of what the real costs are.”
Steven Michaud, president of the Maine Hospital Association, said he understands why some patients in Maine would seek treatment out of state to save money, but he said the long-term effects of such practices could further erode Maine’s already weakened health care infrastructure.
Those who travel to Boston or elsewhere for medical treatment when it’s convenient may find someday that the Maine hospital they once relied on for emergencies is no longer there when they need it, he said.
“They’re not sending 80-year-old patients with congestive heart failure to Boston. You’re not sending substance abuse or mental health patients to Boston,” Michaud said. “They’re staying in rural Maine, in the Maine hospitals, and we’re treating them.”
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