20 Dec 2016
Maritime Health Newsletters David Shubin 0 comment

Outrageous Medical Costs

Gaining a quick understanding of maritime healthcare can save your company thousands of dollars. Here’s a quick rundown.

In the United States, maritime healthcare involves two main groups—healthcare providers and medical service companies. In addition, multiple roles exist within each group.

Healthcare Providers

Healthcare providers are medical facilities and medical professionals. Medical facilities are hospitals and clinics. Medical professionals are doctors, nurses, and other medical specialists who provide services to crew members.

Healthcare providers make money by charging a fee for each service they provide to a patient. United States laws prohibit healthcare providers from paying commissions to people or companies who refer patients to them.

Medical Service Companies

Medical service companies coordinate medical care for crewmembers and ship owners. The United States maritime healthcare market generally consists of two types of medical service companies, which you can classify as—medical managers and medical brokers.

Why Agents Should Not Be Tasked with Providing Healthcare Services

In the United States, ship agents may be able to send crew members directly to healthcare providers, but they shouldn’t. Working with providers can be challenging for already overworked agents. When agents add medical services to their already long list of duties, expensive and often unnecessary emergency room visits frequently occur, because going to the emergency room is the most expedient action an agent can take on short notice.

Medical Managers

Medical managers like SphereMD are medical service companies with doctors and nurses on staff. They manage medical care on behalf of agents, P&I clubs, correspondents, ship owners, and ship managers. Medical managers generally charge hourly rates and fees based on a set percentage of medical bill savings achieved.

Medical managers NEVER pay commissions to other organizations.

Medical Brokers

Medical brokers are medical service companies that contract with specific healthcare providers for discounted rates, and they provide medical services at the request of agents and transportation providers. When given a choice, many P&I clubs and correspondents avoid the use of medical brokers.

Medical brokers seldom have doctors on staff. Instead, they focus on setting up arrangements with providers to send patients to specific facilities and medical professionals for a substantially discounted rate, sometimes up to 65%, which ultimately benefits the brokers.
Here’s how it works. Medical brokers forward full-cost medical bills from providers to agents, for payment-in-full by ship owners or P&I clubs. Medical brokers make money by keeping the difference between each medical bill’s full amount and the prearranged provider discounted rate. Some medical brokers may pay commissions to transportation providers and other companies who send medical cases their way.

The tables show an example of a hypothetical medical broker’s cost breakdown for a crew member’s six-day hospitalization.
chart1
Even if the $59,000.00 profit is reduced by a 20% discount offered to the P&I club for the initial gross bill for services, the profit for the broker would still be $41,200. The question remains, does the broker’s involvement warrant such a high commission? In addition, the calculations might be even more complicated and less transparent if the broker also paid a commission to a referring party.

Again, these examples are hypothetical but based on real world cases. Are you, as a ship owner or P&I club, okay with the bottom line economics of these cases?

Medical brokers can use this business model because by tend to avoid transparency. In other words, medical brokers usually avoid disclosing the discount relationship they have with providers or the actual costs they are paying for medical services.

Are you okay with a broker making more than the hospital?

The Transparency Test

Telling the difference between medical brokers and medical managers can be tricky. To help you understand your medical service provider and avoid paying excessive medical costs in the United States, SphereMD recommends asking the following five “transparency” questions for all major medical cases*:

1.) Ask the medical service company: Can you provide evidence of payment in full to the provider?
Before paying medical bills, request evidence of payment in full to the hospital from the medical service company. This information can reveal if any hidden discounts were accepted. Medical managers will gladly provide such evidence; however, medical brokers may resist or outright refuse to provide this information.

2.) Ask the medical service company: How much profit is the medical service company making on the billing?
Request information about how much profit the medical service company is making on the billing. The cost of using a medical service company should be transparent, reasonable, and predictable, such as based on a predetermined hourly rate or percentage of savings. A medical manager will share this information, but medical brokers may resist or refuse this request.

3.) Ask the medical service company: Would you be willing to stand down and no longer be involved with a case, if necessary?
Ask the medical service company if it would be willing to stand down and no longer be involved with a case. A willingness to step down shows flexibility, fair dealing, and the desire to work on behalf of the ship owner or P&I club. A company that refuses to step down implies a forced relationship and poses a barrier to transparency. Medical managers will happily comply with this request, but medical brokers may resist or refuse to step down.

4.) Ask the healthcare provider: How much was the bill settled for after the fact?
Find out from the provider facility (the hospital, clinic, or other facility) how much the bill was settled for after the fact. You can then use that number to cross-reference with the medical service company’s invoice. A medical manager’s invoice will transparently show the settled amount. A medical broker’s invoice will not show the settled amount.

5.) Ask the healthcare provider and medical service company: What were the detailed charges?
Request to see a detailed account of all provider charges. Such details are necessary to understand how much providers have discounted their fees for the medical service company. Medical managers will provide the details, but medical brokers may resist or refuse this request to avoid transparency.

 

Proactive Steps

Armed with this information about medical providers and medical service companies, ship owners and P&I clubs can better control their costs. SphereMD believes that the best practice is to work with agents to define the steps to be taken for any crew medical care before the need arises. We also recommend that your P&I club is contacted as soon as any non-routine injury or illness occurs. Finally, ship owners may consider hiring a medical manager to represent all U.S.-based medical needs to ensure transparency, every step of the way.

 

Two Strikes and You Are Out!

SphereMD recommends a “Two Strikes and You Are Out” policy with major medical cases*. We know that’s one less strike than usual, but medical care is too costly to wait for a third mishap. We recommend that you avoid any medical service company that resists or refuses to respond to any of the transparency questions twice. Once a company strikes out, instruct your agents to avoid the medical service company by NAME in your voyage instructions.

 

 

*We define major medical cases as having an average bill of more than $5,000. Reviewing small, expediently run cases tends to be more expensive to review than the amount of savings that could be realized.

29 Sep 2016
Maritime Health Newsletters David Shubin 0 comment

Maritime Medical Advice™

Imagine getting one of these calls:

“Your captain slipped off a ladder and landed headfirst! The captain is being treated at a medical  facility, and a replacement captain is already onboard. Unfortunately, the USCG won’t let your vessel leave. They want to see the drug and alcohol test results, but tests were never taken…”

 “A cadet on your vessel injured his finger. He was treated in port and repatriated after being found unfit for duty. Your vessel’s ready to go as soon as the drug test results are in. For now, everyone’s just waiting around.”

These scenarios are based on true accounts of onboard injuries. Injuries occur, and when they do, they can cause extended delays and devastating losses, well beyond the initial tragedy. With proper training and planning, some of your losses can be mitigated when an injury occurs on your vessel.

Did You Know?

In the United States, medical pricing is unregulated. A CT scan can cost $350 in one port or facility, and $11,000 in another.

Reminder: Always contact your P&I Club when an injury or illness requires more than basic first aid onboard the vessel.

When an injury occurs that requires more than first aid, captains, crewmembers, and shipping agents should immediately think about drug and alcohol testing. Train and remind your crew that drug and alcohol testing must be conducted as soon as possible after an injury. This helps your vessel avoid delays, and it’s a federal regulation. By law, everyone directly involved in an incident must be chemically tested as soon as possible:

  • Drug testing is mandatory within 32 hours following a serious marine incident
  • Alcohol testing is mandatory within 2 hours following a serious marine incident

If alcohol testing cannot be conducted within 2 hours due to safety concerns directly related to the incident, testing must be done as soon as possible but no later than 8 hours following the injury. All inspected vessels certificated for unrestricted ocean routes must have an alcohol breath-testing device on board.

Testing Specifics

Directly Involved

You may have noticed that directly involved is mentioned in the federal regulations. A directly involved person is anyone whose order, action, or failure to act may have contributed to an injury. In addition, a law enforcement officer, such as a Coast Guard officer or a state or local police officer, may decide whether a person was directly involved in an injury. Once a person is identified as possibly being directly involved, the required alcohol and drug testing must be completed.

Coast Gaurd Forms

Along with testing, two Coast Guard forms must be submitted to the appropriate Officer in Charge, Marine Inspection following a serious injury:

  • CG-2692, Report of Marine Accident, Injury or Death
  • CG-2692B, Report of Required Chemical Drug and Alcohol Testing Following a Serious Marine Incident

As you might suspect, drug test results are not always available when the forms are submitted. In those cases, the marine employer must report the results—positive or negative—as soon as the results are available.

The Timeline

The testing and analysis process involves a number of agencies and takes time. This can be seen in our simplified timeline diagram to the right.

At a minimum, the process takes several days. Every delay in the initial sample collection slows down the entire process. This can quickly grow into an enormous problem because vessels often cannot operate or are held by USCG until negative results are confirmed. When you preemptively train your crew and plan for emergencies, you gain some control over your vessel’s delays.

Injury Costs

Recently, a 2nd Engineer was working on a motor. Everything was humming along until he cut off the tip of his right index finger. Immediately, an ambulance rushed him to the hospital. The vessel was due to depart for Japan in three days. At this point, the path to recovery could go two ways—what actually happened and what could’ve happened.

What Actually Happened—Days of Delays

Here’s what happened in the real situation. Try not to cringe as you feel the days slip by:

  1. The patient was treated at the hospital and returned to the vessel.
  2. The marine inspector reported that he required drug and alcohol testing results.
  3. The testing was performed on the patient two days after the initial report of injury.
  4. The test was mailed to the lab.
  5. The lab sent the results to the Medical Review Officer (MRO).
  6. The MRO confirmed the results and sent them back.

As you might imagine, those six steps took several days—but that’s not the end of it!

  1. After receiving the initial test results, the USCG reported that they also needed drug and alcohol test results from two other crewmembers, who were “involved” in the accident but were not yet tested…

What Could’ve Happened—A Quicker Way

If the vessel owner had been prepared, days could have been saved. While the patient was being treated, required actions could have begun immediately and looked something like this:

  1. The injury was reported correctly and drug testing was performed immediately on everyone involved in the accident.
  2. The tests were mailed to the lab.
  3. The lab sent the results to the MRO.
  4. The MRO confirmed the results for everyone involved in the accident and sent them back.
  5. The engineer was back onboard, crewmembers were cleared, and the vessel sailed with minimal delay.

In the real situation, the USCG would not authorize the vessel to sail until they received test results for all crewmembers involved in the accident. Vessels need people in certain positions who hold specific certifications. Leaving the crewmembers was not an option. Ultimately, the vessel was delayed two additional days, which cost a minimum of $20,000.00 per day.

Preemptive Planning

Preparation

Be prepared—by far, that’s your best plan. The USCG inconsistently enforces drug testing. Some ports are stricter than others. Instead of hoping for the best, you need an action plan that’s ready to go when you need it. In our experience, we’ve found that you can avoid vessel movement delays and reduce costs after an injury if you:

  • Make testing arrangements
  • Have shore-side support for all potential drug-testing needs—get someone to the ship to get samples taken as quickly as possible.
  • Report, report, report! Report all injuries requiring more than first aid to the marine inspector.
  • Teach and remind your captain, crew, and shipping agents to think “drug testing” as soon as a serious injury occurs.

Injury Care Done Right

At SphereMD, we have handled serious injury situations many times, and helped thousands of vessels and crews avoid unnecessary delays. We know what we’re doing, and we’re ready to go when tragedy strikes.

When a crewmember was pinned to a vessel by the gangway, we made sure he was immediately taken to the hospital for treatment. Then, we dispatched a technician to get a sample from the patient within 1 hour of his arrival at the hospital. As soon as we had the sample, we got it in for testing that same day and had results before the patient returned to the vessel. Compare our expedited process to the other real event described in the sidebar, when the 2nd Engineer cut off the tip of his finger.

Nobody wants to think about accidents and serious injuries, but failing to report or waiting until the USCG requests testing can keep your ship stuck for 3-5 days. At an estimated $20,000.00 per day, a little planning saves big.

Beware...

Some doctors along the eastern seaboard may be overcharging. This month, we are calling attention to independent east coast providers who, based on our experience, have rates that are sky high compared to typical rates.

Example physician charges:

  • $600-$750 to see a patient

(typical rate: $200–$400)

  • $2,000 x-ray fees

(typical fees: $200–$400)

To avoid run-ins with unnecessary costs, we recommend contacting your P&I Club for port specific medical advice.

We also recommend that all Owners and Operators hire a medical management company to handle ALL medical requests for US ports of call.

SphereMD facilitates the best medical care for you and your employees,
efficiently and affordably in all U.S. ports and Panama.