Surgery Center of Oklahoma Blog

June 28, 2011


Filed under: Medicare — surgerycenterok @ 2:21 pm

I haven’t written much about free market health care on this site yet, so let’s get started.   Free market health care means no-government health care.  To the extent that the government is involved in any market, that market ceases to be free.  Government is force, pure and simple.  The brilliant Austrian economist Murray Rothbard defined government as “…a monopoly on violence.”  Any time that government funds are involved in any market, there are strings attached and usually price controls, fraud, bribes and corruption as those in power morph their position into wealth.  Medical markets are no exception.  There is nothing “free market” about Medicare.  That is why it is a disaster and a bankrupt Ponzi scheme. Government Ponzi schemes like Medicare and Social Security make Bernie Madoff  look like a saint.  Current workers are taxed for the current elderly.  There is no Medicare trust fund just as there is no Social Security trust fund.  There is simply a transfer of earnings from the young to the old.  The demand for medical care from the elderly is huge because this care is so heavily subsidized that little out-of-pocket exposure exists for the beneficiary.  Seriously, how many of the scooters you see old folks running around in would be sold if they were coughing up their own dough to buy them?  This is only one of  the countless examples of market distortions in a non-free market.  How many scooters are needed?  What should their price be?  These basic questions can never have accurate answers as long as the government is involved in their purchase.

What should a heart surgery cost?  How much should a month cost in a nursing home?  How much should my blood pressure medicine cost?  Once again, no one is asking these questions in a hardware store, are they?  If the water hose or the paint sprayer or the nails or hammer cost more at one store than at another a natural give and take and balancing takes place that insures that the buyer and seller end up at the right price.  This beautiful dance of the free market has been thwarted  in the practice of medicine and is in large part due to the presence of government payments and the politics and fraud that go along with socialism.

Someone I know just back from Israel, a country with a socialist health care system,  had a friend take an ambulance ride over there.  He said, “it only cost $100.” I quickly pointed out that it didn’t cost $100.  It may have cost only $100 to the one riding in the ambulance, but it cost people who were not riding in the ambulance  money, as well.  This is part of the sickness of socialism….no one really knows what anything costs.  I have heard patients say that they were going to wait until they turned 65 and enrolled in Medicare before they had their knee replaced so that it would be free.  But it’s not really free, is it?  What they really mean is…”I am going to wait to have my knee replaced until that young struggling family down the street where both parents are working two jobs will pay for my surgery.”  Too harsh?  But wait, you say, “didn’t this old person ‘pay into Medicare’ all of their working life?”  Of course they did and the money was squandered by politicians buying their votes, promising not to “touch their Medicare.”   So the money the current 65 year old person paid in is gone….long gone…and the care they receive is paid for by the current working young. But wait!  ”I’m elderly,” you say.  ”I pay Medicare premiums every month!”  This “premium” doesn’t even cover the drug benefits.  When does this Ponzi scheme madness stop?  It stops with bankruptcy.  It won’t stop suddenly.  It will begin with rationing and price controls (think drug shortages, waiting lists for surgeries, deaths from neglect), the usual bag of  government tricks that never works.  Aren’t there any other solutions?

I think that there may be one.  It is politically possible and consistent with the mood of the people in this country now. It is an expression of what is called “the doctrine of subsidiarity.”  Simply, the government that governs best governs closest to home.  Why not send Medicare to the individual states?  Why not let Oklahoma or Texas deal with the health issues in their own respective states temporarily on the way to eliminating federal Medicare?   Make private insurance available to the elderly who can afford it, and enroll those who can’t in Medicaid temporarily.  This would, of course, mean that the taxes that go to D. C. for this would no longer make the trip.   A transition to a situation and market where individuals take care of themselves, and local communities made up of volunteers and charitable organizations taking care of those who can’t care for themselves may be possible, I think, if this first step (getting Washington, D.C. out of the picture) is taken.  Many of the elderly in this country are waking up and realizing that “their Medicare” represents a black mark, not a benefit.  Fewer and fewer physicians are willing to see Medicare patients and their access to care will continue to be limited.  More and more of the Medicare population are clamoring for an alternative, as sadly they have none now, other than going completely uninsured. This new awareness on the part of the elderly may make bold changes more politically feasible than the gang in Washington perceives.

Medicare and other federal “entitlements” need to end or we are all bankrupt.  Maybe the best way to make this happen is to first send it home for the individual states to deal with.  Tinkering with the age of eligibility or deductibles simply delays the inevitable and doesn’t begin to solve this huge problem….it just “kicks the can farther down the road,” as the columnist Gary North has said.  Maybe one of the reasons that we have so many folks that are  uninsured  is that they are paying (through Medicare taxes) for scooters and heart surgeries and total knees for people they don’t even know.  Thankfully, more and more of the elderly in this country are sick with the thought of bestowing this burden on their children and grandchildren.

G. Keith Smith, M.D.

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June 27, 2011

Provider Tax 5

Filed under: Uncategorized — surgerycenterok @ 4:13 am

Wow.  Just when I thought there couldn’t be any more to say about this mess the local newspaper reveals that the head of a state agency administering state-funded health care to the poor (and an agency that has cut benefits to the poor) has bestowed a gigantic bonus on their agency chief.  This guy’s great achievement?  Setting the hook on the taxpayers for the provider tax, a tax that will be collected by his agency that in return will retain huge amounts of this tax to compensate them for this effort.

And what will be done with this money?  It will go to the poor hospitals that have to “take all comers!”  Like the hospital in today’s paper that is building spa-like ER’s in two locations and just spent $200 million in revitalization efforts at their main hospital.  What?  $200 million?  Where do they get $200 million dollars?  Did someone say that they needed more money to take care of the poor?  Seriously?  Have they maybe slightly overdone the cost-shifting thing a bit?  How much care would $200 million dollars provide to the poor in Oklahoma?

G. Keith Smith, M.D.

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Pricing Pressure

Filed under: Uncategorized — surgerycenterok @ 3:56 am

I didn’t think it was possible for it to happen again so soon.  What am I referring to?  A local hospital (and once again, not one known for providing affordable care to the uninsured)  came within $10 of our internet price for a gall bladder removal.  The patient, no fool, though, realized that our price was inclusive and that the hospital quote was once again for the facility, only.

The importance of this trend here in Oklahoma City cannot be overstated I think.  This hospital was not quoting a fee representing an amount at which they were losing money.  They were, quite simply, afraid of losing this surgical case to a competitor that has posted their prices online…..US!

I hope this continues.  What a great development for those needing health care services in this area!  And then, as I have pointed out before, there is, as Bastiat would say, the economic benefit of “what is not seen.”

G. Keith Smith, M.D.

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June 22, 2011

Medical Tourism Development

Filed under: Medical Tourism — surgerycenterok @ 3:28 am

Here in the old USA and also in other countries there are companies that help people find affordable health care.  The Surgery Center of Oklahoma is one of the premier and favorite destinations of those individuals needing surgery and those companies that help individuals find high quality and affordable care.  Those seeking this care generally fall in to one of the following categories:

1)Uninsured here in the U.S.(this category also includes those with such high deductibles that they will be paying for the whole thing themselves).

2)Foreigners (mostly Canadians) not willing to wait on a list (usually years) to have their surgery within their broken-down socialized system

3)Foreigners whose home country has poor or unavailable care.

Let’s start with the easy one…#3.  If you have money and you have a hernia, you would naturally travel to another place to have surgery if care was unavailable where you lived.  This is perfectly understandable and no different than if you lived in a rural community and drove “to the city” to have your brain tumor evaluated by a neurosurgeon.  We have had patients come to our surgery center from Africa because they had to travel anyway and they figured they might as well come to a place where they knew what it would cost.

Now let’s try to tackle #2.  First of all, what does it mean that people who live in Quebec or Ontario or Vancouver or Montreal (big cities with every medical specialty and subspecialty represented) come to the Surgery Center of Oklahoma for their care?  What sort of system is in place when an ear nose and throat surgeon whose office is across the street from your Vancouver town home (and who is not busy!!) is shunned for an ear nose and throat surgeon in Oklahoma City, thousands of miles away?  What other evidence do we need that the Canadian styled system has failed?  Are the Canadian doctors any good at what they do?  Yes they are, without a doubt.  Are they working hard?  No.  The Canadian government has limited what amounts of money can be spent on care (regardless of demand) so when the money runs out the physicians and hospitals stop working.  ”There’s no more money for hernia surgery this year, Mr. Jones.”  ”There’s no more money for coronary artery bypass surgery this year, Mr. Williams.”  I have heard this story countless times.  Compounding the problem is that the Canadian people have been brainwashed into thinking that their care is “free.”  This combination of “free” care with deliberately stifled supply has caused such an imbalance of supply and demand that people are waiting in line for surgery.  For years.  Watch the video on our Media tab of the poor woman who came to Oklahoma City from Canada to have her hip replaced to get a feel for what she went through.

So, many of the Canadians come here.  Some find us on their own.  Some find us through brokers or companies that help these patients escape the wait.  What effect has this competition had on the Canadian system?  Not only have the wait times shortened for these patients due to the leak of surgical patients into the U.S.(and the incredibly bad press this has caused for the politicians in Canada), but the prices charged Canadians by the facilities along the border have fallen.  Much of the revenue of hospitals on the U.S. side of the Canadian border come from Canadians willing to pay for their surgery in order to avoid the lines at home.  The pricing at physician-owned facilities here in Oklahoma (hats off to the Oklahoma Heart Hospital and the McBride Clinic Hospital for helping their share of these folks!) like ours have made the prices more competitive along the border to the benefit of the Canadians, as these border hospitals count on this revenue and are not wanting to lose this business.  I think this is  a great example of how true competition disciplines the service providers to the benefit of the consumer.

Ok…ready for #1?  This is the really hard one.  Medical and surgical care in the United States is of fairly uniform quality no matter where you go. What?  How can this be?  Why would people travel from Alaska and Maine to Oklahoma City for their surgery then?  Price.  Guaranteed Price.  The provision of quality care is not because of accreditation agencies or state health departments or federal rules and regulations.  The delivery of quality medical care is the result  of the small remnant of the free market that while whittled down and beaten down here in the U.S. still wields unimaginable power.  If you are awful in this business you will go bankrupt, as it should be.  Once you socialize care (government care) the worse you will become but ironically…..ready?….  the more money you make!  What?  Just look at any government program (including public schools and banks).  The worse the performance the more money thrown at the problem.  Not so in the private sector.  If you want to find real quality and value look for places where there is real competition and a vital entrepreneurial spirit….that’s where you will find quality.  Because the folks and facilities in that environment who are no good….well…they are already gone!…out of business.

The entrepreneurial spirit amongst physicians here in Oklahoma is alive and well.  The care delivered in this part of the country is second to none because of the healthy competition within the medical community.  The private practice, rugged individuality still prevalent here makes us all better than we would be were we practicing in an environment where the patients were captive and had to come see us and were without choices.

So…Maine….Alaska…Florida…California…good luck keeping up with us on the quality front.  Until you post your prices, though, your facilities will continue to lose business to those of us who do post them and practice in a competitive environment.

G. Keith Smith, M.D.

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June 14, 2011

Worker’s Compensation and Cost Shifting

Filed under: Uncategorized — surgerycenterok @ 6:56 pm

Why is it that when you enter your place of work your health insurance no longer applies and “worker’s compensation insurance” takes over?  Why is it that when you enter and start your car that anything that happens to you there is no longer covered by your regular health insurance?  Why is it that when you turn 65 your insurance no longer covers you and you must go on the Medicare dole?  What is going on here?  How did all of this come about?

The great intellectual  economist Murray Rothbard encouraged us to utilize the concept of “who benefits,” or cui bono, when trying to figure something like this out that at first might not make sense.  This is very useful when unravelling political dealings:  just start with the question, “who benefits”  from this or that policy or law and you are well on your way to getting to the bottom of the mystery.  Who benefits from all of the risk of the workplace or the car or old age being carved out of your regular health insurance?  If you said, “my health insurance company,” you go to the head of the class!  Think about it.  If you ran an insurance company and were trying to maximize profits, you would collect as much premium as you could and you would reduce your exposure or risk to the extent that you could.  Every move that reduced your insurance company’s exposure to risk would increase the likelihood of a profitable venture.  Many political successes and fortunes have been made due to enabling the insurance industry in these efforts.

Is this an example of cost-shifting?  I don’t know why not.  Big insurance companies have shifted the costs and liabilities of workplace injuries, car wrecks and the health problems of old age away from their balance sheets and to ours.  Now we must buy worker’s compensation insurance, automobile liability polices with health coverage and the public is bankrupted with Ponzi schemes like Medicare.

I thought of this while watching the latest political theatre surrounding the reform of worker’s compensation here in Oklahoma.  The smoke screen resulting from the discussion of all of the meaningless details keeps most folks from thinking about the above questions.

Why not have our health insurance cover us all of the time and eliminate worker’s compensation?  Oh well, this idea never had a chance during the last legislative session here in Oklahoma.

G. Keith Smith, M.D.

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June 9, 2011

Pricing Pressure

Filed under: Uncategorized — surgerycenterok @ 7:00 pm

Two days ago an amazing thing happened here in Oklahoma City which was not reported by any of the television stations or by any newspapers.  This event went completely unnoticed just as those involved hoped that it would.  I have predicted that this would happen but never thought in my wildest dreams that it would happen this quickly.  A local hospital quoted a surgical fee to an uninsured patient at…. the exact, same price as ours as listed on our website.  Why is this significant?  Ask someone without insurance who has ever had surgery and tried to get a fixed price from a hospital prior to their procedure and you will get the same answer every time:  ”they wouldn’t give me a price.”  That this particular uninsured patient was given a price guarantee up front by a local hospital in and of itself is incredible and earthshaking in the medical pricing world.  That’s just the beginning though.  Hospital pricing (when it is given which is rare) is typically 3-6 times our pricing depending on the procedure.  What does it mean that a local hospital quoted a more reasonable fee?   What does it mean that they quoted the exact same fee as listed on our site?  Could it be that the big hospitals are feeling some pricing pressure?  Is this a good thing for the community?  Have you ever been in a position where several salesmen were fighting for your business?  Isn’t it common sense that the more they compete the better off you are?  Margins are typically whittled down until one of the parties doesn’t care whether they lose the business.  It’s the same as when you are selling your home and two bidders are fighting over it…the more they squabble the better off you are.

In this particular case a $5000 price was quoted (it wasn’t exactly $5000 which is why the odd number quoted got my attention).  This particular hospital isn’t known for bargain pricing and would normally have charged about four times this amount (having been in this business since 1997 I have seen my share of hospital bills from disgruntled patients and have a pretty good idea about the price multiples at various facilities and big hospitals). That means that they have discounted their fee by ten to fifteen thousand dollars…..and still want the business! As usual, though, the hospital didn’t quite get it right and lost the case to our facility.  Why?  Because their quote was only for the facility.  Our price included the surgeon and anesthesia charges.  The patient got in to see the surgeon the day after he called our facility and will have surgery here early next week.

I am trying not to overstate things here but I hope readers understand the significance of this event.  Even if the patient had gone to this local hospital, they still would have saved at least $10000 because of  the competition generated by the price transparency at our facility. The benefit to the uninsured patient  paying their bill is obvious.  The value of the introduction of price competition in the medical marketplace is incalculable.  As F. Bastiat would remind us, what is not seen is the productive result of the use of  the $10000 saved.  We at the Surgery Center of Oklahoma welcome this development and hope more will join this local hospital in an effort to provide affordable health care and enter the arena of free market pricing.

G. Keith Smith, M.D.

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