New Start Up's Lap Band Blue Light Special Carving up the General Hospitals' Business in Plano, TX

For many in Dallas, Fort Worth, Texas, shopping and eating are contact sports.  Retailers and restaurants often test new store concepts here to see if the they can handle the stiff competition before rolling out into other markets.  For example, about  twenty years ago a retailer by the name of Wal-Mart introduced its first mega food and discount combination store, and a restaurant by the name of Chili's first opened its doors in Dallas. 

Health care and retail observers should therefore take notice of a new specialty hospital that recently opened in the Dallas Fort Worth suburb of Plano, TX, and is applying discount retail concepts to health care. The hospital clinic is promoting lap band surgery at a hot $9,995 price point that it is promoting in newspaper ads. 

It seems like a "can't miss" proposition.  The hospital's location is in one of the most obese markets in the country, and its 75093 zip code places it in one of the most affluent markets in the country.  And it has priced the extremely popular and controversial lap band weight loss surgery at less than two thirds below the price of competition from area general hospital competitors.  We fully expect the hospital to be extremely successful,  and it is probably poised to book its availability of surgeries for months in advance.  A chain or copy cat hospitals cannot be far behind.

We are not going to comment on the ethics or safety of the clinic or of lap band surgery.  And we don't intend to to debate whether insurance companies should cover the surgery.  (In spite of what you may hear, most insurance companies will not cover it no matter what, even if patients get a "note from their doctor" stating that the lap band surgery is medically necessary.)  Lap band surgery is simply not something offered by Texas employers as an employee benefit.

The facts are, obesity is a growing public health problem, and lap band surgery is a popular way that individuals who can afford to pay can lose weight.  There are no less than ten general hospitals within ten miles of the new specialty hospital offering the lap band surgery at prices much higher than $9,995.  Four of these hospital have been open less than three years, and three others have had major expansions. 

This not only represents a lot of fat shed in Plano, but a lot of higly profitable surgeries by the GH's that are now under price pressure from the startup hospital.  Insurance generally doesn't pay for these surgeries so insurance carriers cannot control what hospitals get reimbursed for this surgery.  This new specialty hospital stands to siphon off much of this very profitable lap band surgery business from the general hospitals, just as several area cosmetic and orthopedic surgery specialty hospitals have done.

And this specialty hospital will siphon off more than local patients.  At $9,995, many individuals who may have been reluctant to become medical tourists and travel to a foreign country like India, Mexico or South America for cut rate lap band surgery can now take a short and safe flight into Dallas Fort Worth Airport, drive a half hour to the hospital and then fly home a few days later and lighter.

Employees with Flexible Spending Accounts, Health Savings Accounts, or Health Reimbursement Arrangements won't get any break from Uncle Sam for lap band surgeries either.  Section 213d of the IRS code specifically disallows cosmetic surgery, and you can be almost guaranteed that if you hand your CPA a note from your doctor stating that the surgery is medically necessary, he or she will advise against writing off the expense or of using qualified health funds.

A possible strategy would be for a weight loss clinic to give away the lap band surgery but charge extra for weight loss counseling, because therapy is a Section 213d deductible medical expense and is also often covered under group health insurance plans.  But the "Usual and Customary" rule would likely close this loophole for individuals hoping that insurance or Uncle Sam will defray the cost of lap band surgery.

Yes, diet, exercise and wellness initiatives are more cost effective, safer, and can be often be claimed on insurance and/or on your income tax.  But to the growing numbers of morbidly obese in this country, the monthy payments on a $9,995 procedure now make this a viable option.

So for the present time, the $9,995 blue light special  for lap band surgery is flashing in Plano, Texas.  And those that can afford to pay and  who are willing to take the risks will be keeping this clinic very busy, for some time to come.

For more information and strategies of how Texas employers and employees can lower the cost of health care and find affordable health insurance and employee benefits, subscribe to the newsletter at GroupBenefitsAdvisors.com or contact Mike Chapman at Group Benefits Advisors, (888) 398-6246.