New kind of Canadian-style care comes to United States

For years, there has been talk about reimporting drugs from Canada to cut pharmaceutical costs. But now, the conversation has turned to reimporting patients from Canada to cut procedure costs.

Richard Baker, a Vancouver native and a public critic of Canada's single-payer health care system, started his business, Timely Medical Alternatives, in 2003 to negotiate rates with American doctors and hospitals so fellow Canadians could avoid long queues. But earlier this year Baker expanded his business to match Americans with U.S. doctors and hospitals, a subsidiary he calls North American Surgery. Baker said uninsured Americans were calling him, looking for the same discounted deals he got for Canadians.

Technically, U.S. patients don't have to go to Canada and come back, like with reimported drugs -- but the effect is the same.

Baker negotiates rates with U.S. hospitals, similar to the discounted rates insurers negotiate. He adds a percentage onto that rate for his own fee, collects the money from the patients, then pays the hospital cash up front before the patient is treated. In most cases, the negotiated rate is a package deal that includes facility fees as well as payment to all the surgeons and ancillary staff, and the hospital distributes the lump sum appropriately.

With more complicated procedures, such as neurosurgery, where the price might not be as straightforward, Baker negotiates rates with each party that are subject to change. The patient is responsible for any charges associated with unforeseen complications, which Baker says has not happened once in his company's four-year history.

Nicholas Terry, a Saint Louis University School of Law professor and co-director of the school's Center for Health Law Studies, said this is the first he has heard of such an arrangement but he finds nothing legally wrong with it. If anything, "it's a sad commentary on how the U.S. health care market isn't a good market."

Scott Edelstein, a health care attorney at Squire, Sanders & Dempsey's Washington, D.C., office, agrees there is nothing illegal with Baker's business -- unless there are state regulatory issues that would define the business as an insurer.

Baker is not aware of any such regulations and said he doesn't act as an insurer, because he does not collect premiums and accepts payments only on a case-by-case basis.