US healthcare accepts a bartered bird in the hand

Liposuction in return for chickens? Really? This probably wasn't the kind of healthcare reform that US Democrats were thinking of when they parodied Sue Lowden, the Republican senatorial candidate for Nevada. In April, Lowden said that bartering with doctors was a suitable way to pay for healthcare. "Those doctors who you pay cash, you can barter with, and that would get prices down in a hurry," she said. "I would say go out, go ahead out and pay cash for whatever your medical needs are, and go ahead and barter with your doctor." Defending her statement later on, Lowden said that in the past, doctors would take poultry as payment. This promped the Democratic Senatorial Campaign Committee to set up a satirical web site called Chickens for Checkups . But is it really such a crazy idea? Not according to Chris Haddawy, chief operating officer of barter network BizXChange , who says that bartering for healthcare services makes up 15% of the network's business. BizXChange participants trade their services using a private currency called the BizX dollar, which can be exchanged for any goods and services online. "We deal with more solo practitioners, such as dentists and optometrists," says Haddawy, who describes some of the benefits of trading through his network. "They're getting payment right away, and they're not getting chiselled away by insurance firms that only pay them 40 cents on the dollar. They also don't wait for 90 or 120 days to get paid by the insurance firms." BizX dollars can be counted as US dollars under US tax accounting rules, says Haddawy. However, that doesn't stop it causing tax issues for consumers, warns Tom McDowell, a barter business consultant and former executive director of the National Association of Trade Exchanges, who has been in the private currency business for almost 30 years. Barter companies must report taxable transactions to the Internal Revenue Service (IRS), he warns. "Most people don't have a way to provide for additional income withholding other than through their employment. So you'd create tax ramifications when at the end of the year, these people sold an extra $10,000 and had a tax liability and couldn't pay their taxes," he explains. "The IRS comes after the barter company to do withholding, and we're dealing with a different currency so there's no way to withhold those dollars." Barter credits may be equivalent to US dollars, but the IRS will not accept them as payment. Business to business Perhaps for that reason, bartering for healthcare services appeals more to business owners who can route such taxable transactions through their companies, say experts, adding that they also tend to have more services to offer in exchange than consumers do. Many doctors find barter unsuccessful for two reasons, McDowell argues: firstly, their services are covered by insurance plans, and secondly, most patients have existing relationships with a physician and don't want to shop around under a bartering system. However, some physicians are experiencing just the opposite. Shelley Lewis, practice manager for Jenks Family Physicians in Jenks, Oklahoma, has been participating in the ITEX barter network since 2005, and says that 5% of the practice's business is conducted on a barter basis. Given the thousands of patients that the practice deals with, that's a significant figure. "It has bought us a certain clientele that we may not have known existed," explains Lewis, who adds that she uses credit earned via the barter system to reduce her operational overheads. "Virtually every supply and medical device can be purchased on ITEX. I have my carpets cleaned and get my toilet paper and my medical supplies through ITEX. I use it for buying scrubs for employees. We use a cleaning service and even have employees' cars detailed using the network," she says. Although many patients have health insurance, many of them have high deductibles, ranging up to $4,000 (£2,500). For that reason, Lewis says that a lot of patients will barter for smaller procedures to avoid the deductible expense. The fact that medical insurance covers larger procedures from hospitals may exclude many of them from bartering, but it hasn't stopped some participating. New York's Woodhull hospital offers local artists a workfare-style programme, in which they perform for resident patients in return for healthcare credits. The rationale is that many artists will be living on a budget and unable to afford health insurance, the hospital says. One hour of work earns roughly $40 of credit towards medical procedures, which is banked in a health credit account. Perhaps the most interesting aspect of barter-based healthcare, then, is that it isn't restricted simply to low-income consumers with no health insurance. In fact, business owners are more likely to take part in barter systems. With a complex set of health insurance options, comprised of an arcane set of co-pay and deductible structures, barter is proving to be a money saver for cash-strapped patients, and a useful way for medical practitioners in the US to win new patients, while helping to reduce their own outgoings.