Going to the bazaar for medical services

"Bargaining Down That CT Scan Is Suddenly Possible" in the 27 Feb 2007 NY Times gives an interesting peek into a new business: helping consumers who must pay for procedures bargain down the prices of those procedures.

Companies like MyMedicalControl.com find the rates insurance companies pay hospitals for procedures and use those prices as baselines when they bargain on behalf of consumers. What is the payoff for the company? A "35 percent collection fee" off of what is saved, apparently.

And the payoff for the consumer? Lower medical bills. According to the article, "[f]rom a typical claim of $1,100, Mr. Cahill said, the company shaves an average of $232." That's substantial.

Another company called Vimo.com uses federal Medicare data to arrive to its estimates for procedure prices and points to one reason this business is even possible: better access to data via the Internet.

Recent legislation from state governments provide another reason. "Rudimentary information is increasingly available to consumers. Thirty-two states now require that hospitals provide pricing information to the public."

There are critics who charge that improved price transparency won't help reduce overall healthcare costs. I'm not sure what to make of it, but for the many people who must pay out of pocket because of lack of insurance or because they use a Health Savings Account, it seems increased price transparency and the business services that have sprung as a result of this does help protect the wallet.

And as the article points out, this service is likely to grow fast. Why? Because more healthcare costs are coming straight from -- for better or worse -- more people who are obviously more sensitive to costs and have less power than insurance companies in making sure they are paying a fair price.